Mainfreight posts higher sales, lower profit as labour costs bite
Mainfreight has delivered higher revenues and lower profits in its full-year financial result, as labour costs and internal inefficiencies hamper results overseas.
For the 12 months ended March 31, 2026, Mainfreight reported total revenue of $5.38 billion, up 2.8%.
However, the business’ profit before tax fell by 8.5% to $350.9 million, with net profit also falling 8.5% to $251m.
The company said while it was disappointed to not have improved its profitability from last year, it remained satisfied with the level of improvement during the second half.
“Pleasingly, these improvements have continued into the new financial year. Trading in April and May has been encouraging, despite disruption and uncertainty caused by the Middle East conflict and elevated fuel pricing,” the company said.
Operating cash flows lifted from $584m to $589m over the year, while current debt facilities decreased by $124.5m to $510m.
Net capital expenditure in the year totalled $189m, with expenditure on property accounting for $112m; warehousing racking and fit-out costs of $39.9m, and plant, equipment and software of $36.9m.
The company said total planned capital expenditure through to the end of the 2027 financial year will be $234m, of which $174m relates to property and fit-out.
Despite property and fit-out numbers set to rise, Mainfreight reduced its branch numbers this year from 337 to 331.
It said this was “addressing unprofitable performance in our Asian Warehousing, CaroTrans in Americas, and Italian Transport business”.
Regional breakdown
The New Zealand business had a mixed result for the year, with revenue lifting 3.8% to $1.2b, but profit before tax fell by 10.2% to $120.8m.
The company increased its market share in transport with a number of new customers, and while the use of rail increased, Mainfreight has concerns about the “ferry capacity and schedules across the Cook Strait through until 2029”.
As for warehousing, Mainfreight’s new leased facility in Christchurch is due to become available mid-year and provides an increased capacity to 34,000 pallets.
Consolidation of smaller warehouses exiting existing leases has also provided the impetus for the company to commit to a new 55,000 pallet facility in South Auckland. Delivery of this site is expected in mid-2028.
Australia was the strongest performing region, with revenue up 0.2% to A$1.51b and profit before tax up 11.1% to A$152.6m.
Transport is the region’s strongest performer, where market share in the LTL express delivery market continues to grow.
Asia’s performance was more subdued, with revenue falling 6.9% to US$117.5m, but its profit before tax lifted 31.4% to US$12.9m.
Margins and cost overheads have improved in the region which supported profitability improvement, and poor-performing warehouses were closed during the year.
The Americas had the toughest result, with revenue falling 7.4% to US$616.3m, while Mainfreight reported a loss before tax of US$7.9m, down 151.7% on the prior year.
Transport suffered poor margin return, while sales revenues increased. Despite acceptable warehousing utilisation rates in Dallas and Chicago, the company had poor returns from its warehouses in New Jersey and California.
Air & Ocean profitability also declined during the year because of decreased volumes and ocean freight rates, particularly on the Trans Pacific lane from China due to the “trade tariff fiasco”.
Included in the result was a one-off labour settlement cost of US$1.6m.
Europe also had a mixed result, with revenue lifting 3.5% to €624m but profit before tax falling to €25.2m, down 18.6%.
Disappointing transport performance across its European network contributed to its profit decline, while increased labour costs and an inefficiency in its cross-docks also contributed.
Outlook
Trading conditions in the second half of the financial year for Mainfreight continued to improve during April and May, with stronger than expected sales growth.
However, the cost of fuel, in particular diesel, has increased significantly.
Mainfreight said the increases had a marginal effect on trading in the financial year, with increases only beginning to impact at the end of March 2026.
“Our domestic transport business worldwide is the most affected by fuel cost increases. Diesel remains the preferred and necessary fuel for freight distribution, and sea and air freight cost increases follow accordingly.
“Fuel adjustment factors are applied to our customers’ freight rates as a means to recover the fuel cost increases. These adjustments are passed through to our owner drivers, contractors and service providers. It is our expectation that fuel costs will remain elevated for some time to come.”
The company said while it was disappointed the year’s result was below its expectations, it remains confident of ongoing improvement in the year ahead.
Mainfreight’s directors approved a final dividend of 87c per share, fully imputed at the 28% company tax rate, with payment to be made on July 17, 2026.
This brings the full-year dividend to 172c per share.
Tom Raynel is a multimedia business journalist for the Herald, covering small business, retail and tourism.
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