New Zealand Professional Investment Services Firm, Forsyth Barr

Forsyth Barr

New Zealand Professional Investment Services Firm

We are proud to be a New Zealand owned firm, with 21 offices throughout the country and over 300 employees. We assist personal, institutional and corporate clients providing a full range of investment services.

Forsyth Barr is a foundation New Zealand Exchange firm (NZX) and accredited market participant. We have been confirmed by the Financial Markets Authority as a Qualifying Financial Entity (QFE).

Research is the cornerstone of our advice. We have one of New Zealand's leading teams of analysts. Our global affiliations ensure comprehensive research coverage of all major investment markets.

Equity Bottom-Up

<ul><li>Margins declined in both Express Package and Information Management during 1Q23 compared to the prior year, as labour cost pressure, incremental property costs and higher fuel prices, all impacted</li><li>Modest growth (~+5%) in Express Package network volumes during 1Q23, reflecting the weak COVID-19 full national lockdown impacted prior year period</li><li>The immediate outlook for FRE appears constrained by (1) volume declines in Express Package, (2) labour cost inflation, which is unlikely to ease over the next few months, and (3) cyclical demand risk</li></ul>

Margins declined in both Express Package and Information Management during 1Q23 compared to the prior year, as labour cost pressure, incremental property costs and higher fuel prices, all impactedModest growth (~+5%) in Express Package network volumes during 1Q23, reflecting the weak COVID-19 full national lockdown impacted prior year periodThe immediate outlook for FRE appears constrained by (1) volume declines in Express Package, (2) labour cost inflation, which is unlikely to ease over the next few months, and (3) cyclical demand risk

<ul><li>Freightways (FRE) provided a slightly disappointing first quarter trading update at its Annual Shareholders Meeting, highlighting margin pressure in both Express Package and Information Management divisions</li><li>Express Package margins have been impacted by cost pressures, particularly labour and additional property costs from recent footprint expansion</li><li>Information Management margins were soft reflecting softer margins at TIMG Australia and Shred-X</li></ul>

Freightways (FRE) provided a slightly disappointing first quarter trading update at its Annual Shareholders Meeting, highlighting margin pressure in both Express Package and Information Management divisionsExpress Package margins have been impacted by cost pressures, particularly labour and additional property costs from recent footprint expansionInformation Management margins were soft reflecting softer margins at TIMG Australia and Shred-X

Freightways: First Quarter Trading Update (27-Oct-2022)

Thematic (Sector/Industry)

<ul><li>Freightways (FRE): We are attracted to FRE due to (1) the strength of new customer, (2) further pricing for effort opportunities, and (3) the disciplined expansion into the Australian express freight market</li><li>Mainfreight (MFT): MFT is a high quality business with a proven track record for growth</li><li>Port of Tauranga (POT): POT offers attractive defensive characteristics in the current environment</li></ul>

Freightways (FRE): We are attracted to FRE due to (1) the strength of new customer, (2) further pricing for effort opportunities, and (3) the disciplined expansion into the Australian express freight marketMainfreight (MFT): MFT is a high quality business with a proven track record for growthPort of Tauranga (POT): POT offers attractive defensive characteristics in the current environment

<ul><li>Allied deal value and earnings accretive: FRE's A$160m acquisition of Allied Express represents a key strategic expansion play of its core express parcel operations into the Australian market</li><li>Pricing initiatives keep profitability on track despite cyclical headwinds dampening parcel momentum</li><li>Margin pressure from cost inflation: Rate increases, absenteeism and business expansion contributed to an +11% increase in staffing costs in FY22; contractor incomes increased +7%</li></ul>

Allied deal value and earnings accretive: FRE's A$160m acquisition of Allied Express represents a key strategic expansion play of its core express parcel operations into the Australian marketPricing initiatives keep profitability on track despite cyclical headwinds dampening parcel momentumMargin pressure from cost inflation: Rate increases, absenteeism and business expansion contributed to an +11% increase in staffing costs in FY22; contractor incomes increased +7%

Freightways: FY22 — Allied in Express Expansion

<ul><li>Freightways reported a solid FY22 result and the A$160m acquisition of Allied Express, a courier and express freight company in Australia</li><li>Express Package: Revenue growth of +9%, held back by postal (-6%)</li><li>Information Management: Revenue growth of +10% driven predominantly by Medical Waste gains</li></ul>

Freightways reported a solid FY22 result and the A$160m acquisition of Allied Express, a courier and express freight company in AustraliaExpress Package: Revenue growth of +9%, held back by postal (-6%)Information Management: Revenue growth of +10% driven predominantly by Medical Waste gains

Freightways: FY22 Result and Allied Express Deal Initial Thoughts

New Zealand

Freightways Limited provides express package services throughout New Zealand along with providing information management and business mail services.  The Company's courier services includes same day and overnight national and international deliveries, freight forwarding services, computer media transport and payroll data deliveries.

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Freightways Ltd (FRE NZ)

Freightways: Margin'alised by Labour

Freightways' (FRE) first quarter trading update highlighted strong revenue growth but margin pressures across both Express Package and Information...

Forsyth Barr

Freightways: First Quarter Trading Update (27-Oct-2022)

Freightways (FRE) provided a slightly disappointing first quarter trading update at its Annual Shareholders Meeting, highlighting margin pressure...

Forsyth Barr

Transport Trends: Mixed Bag

The post-pandemic world is a mixed bag for the transport sector: aviation is enjoying an expected and much needed resurgence; global airfreight...

Forsyth Barr

Freightways: FY22 — Allied in Express Expansion

We upgrade Freightways to OUTPERFORM from NEUTRAL to reflect (1) recent share price weakness, (2) a solid FY22 result, (3) the strength of new...

Forsyth Barr

Freightways: FY22 Result and Allied Express Deal Initial Thoughts

Freightways reported a solid FY22 result and the A$160m acquisition of Allied Express, a courier and express freight company in Australia

Forsyth Barr

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