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Fisher Funds Annual Roadshow
August 2004
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Presentation
Introduction to Freightways
Industry, business description and strategy
Financial performance
Recent events and outlook
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Introduction
• Listed on the NZX September 2003
• Established in 1964
• Express package, mail, information management
• Approx. 7,000 retail and institutional shareholders
• Revenue $214m, EBITA $41m, NPAT $16m
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A Survivor
• Freightways’ businesses have survived:
- Regulated / deregulated road transport industry
- Substitute services: fax machine and email
- Many competitors
- Three owners in the last two years
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Express Package Industry Overview and Business Description
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Express Package Industry
• Two segments to Express Package industry– Network couriers 90% of industry revenue– Point-to-point couriers 10%
• Services embedded in supply chains of businesses
• Consolidated industry structure
• Growth underpinned by demand for Just in Time supply
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Business Description - Strengths
• Network of independent contractors
• Dedicated express package linehaul network
• Operational excellence and profit culture
• Experienced people
• Established multi-brand strategy
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Multi-Brand Strategy
Price
Service
Three major brands:
– Differentiated by price and service
– Captures growth across entire market
– Provides defence against competitive threats
Freightways’ Network Courier Brands
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Information Management and Business MailIndustry Overview and
Business Description
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• Well positioned in each niche
• Offers a total information management solution
• Integrated with express package operations
• Records management growth opportunity
Information Management
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Business Mail
• Niche player in deregulated postal services industry
• Postal deregulation enabled expansion of DX Mail
• Growth opportunities in business mail segment
• Drives volume to New Zealand Couriers
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Business Strategy
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• Revenue growth from existing and complementary markets:– Increase volumes from existing customers– Gain new customers– Achieve some price improvements
• Converted into strong earnings growth:– Ability to grow volume at low incremental cost– Volume growth drives efficiencies/productivity gains – Maintenance of margin integrity– Continued focus on cost control
• Explore incremental acquisition opportunities
Business Strategy
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Financial Performance
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• 10% revenue growth in 2004
• 5 year compound average revenue growth of 7%
Operating Revenue
-
50
100
150
200
250
Jun99 Jun00 Jun01 Jun02 Jun03 Jun04
Year Ended
$M
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EBITA
• 27% EBITA growth in 2004
• 5 year compound average EBITA growth of 18%
-
5
10
15
20
25
30
35
40
45
Jun99 Jun00 Jun01 Jun02 Jun03 Jun04
Year Ended
$M
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Recent Events and Outlook
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Recent Events
• Transition to a listed NZ company Sept. 2003
• Acquisition of Archive Security
• Actual 2004 financial performance exceeded IPO forecasts on all fronts
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Outlook
• Economy favourable from Freightways’ perspective
• No change expected in Freightways’ operating environment
• Sustained focus on core business / core strategies
• Business as usual
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Summary
Strong successful business
Positioned to deliver continuing earnings growth
Delivering an attractive dividend yield