Annual Report 2013 - Mainfreight

Margin levels have been impacted
as competitive tension has
increased due to market and
economic conditions.
2013
Will see our first
Mainfreight-branded
vehicles on the road in
Europe.
This is our most challenging business unit,
as we confront and guide the business
through a series of issues – including
high-margin earning customer losses,
poor economic trading conditions, and the
transition from private ownership to being
a contributing member of the Group. All
this with the expectations that our culture
brings: placing value on team members and
customers, and striving for ever-improved
performance.
We have been able to minimise revenue
loss as increased sales activities to replace
lost customers have been moderately
successful. Unfortunately fixed costs and
the competitive environment contributed
to a decrease of 42.7% in this year’s
€9.46 million EBITDA figure.
Whilst our financial results are less than
satisfactory (poor), they certainly do not
reflect the effort and contribution from our
team to position this business for growth
and improved profitability.
During the year we have extended our
network, adding seven new branches:
> > Paris, France: for Airfreight, with the
establishment of an office at Charles
de Gaulle Airport in Paris
> > St. Petersburg and Moscow, Russia:
opened sales and customs offices
> > Transport operations in Cluj-Napoca,
Romania; Kiev, Ukraine; Hamina, Finland;
and Katowice, Poland
Our European Transport operations have
undergone a full reorganisation, now utilising
a common management structure, and the
rationalisation of agency agreements to
reflect Group trading over country support.
We expect to launch the first of our
Mainfreight-branded vehicles in June 2013.
We have been able to secure the Mainfreight
brand in the Netherlands after a legal
challenge and subsequent settlement of
€1.5 million.
In our Logistics operations we have been
successful in retaining long-term contracts
with a number of our larger customers, and
once again received “Partner Status” with
John Deere, making this the fourth year in
a row.
Whilst utilisation of all our warehouses has
improved considerably with the gaining of
new customers, margin levels have certainly
been impacted as competitive tension has
increased due to market and economic
conditions.
Efficiency gains that we are able to
introduce for these customers will reflect in
better margin management over time.
Our Air & Ocean business, whilst still small in
comparison to the other European divisions,
is well positioned for more growth with a
comprehensive six office network across
France, Netherlands and Belgium. Crossselling
across our European customer
base is well advanced and improvement in
Airfreight growth has been seen, particularly
from the USA.
Again it is our intention to focus our
development on our own global network,
particularly from and to Asia and the
United States.
Whilst we are unhappy with the financial
return since acquisition, we are confident
of our presence and potential in Europe,
the strategic positioning towards a stronger,
more global logistics capability and the
customer relationships we are forging.
As a Company we cannot ignore Europe.
We expect that further progress will be
made over the next 12 months towards
improved returns, and we are committed to
this business becoming a larger, stronger
contributor to the Group.
20 Mainfreight | Annual Report 2013