Freightways Group (ASX:FRW) management told investors its first-half FY2026 result reflected steady execution across most divisions, with improving margins, continued market share gains, and a balance sheet positioned to support ongoing investment and acquisition activity. Management also highlighted a modest lift in New Zealand volumes in the second quarter and strong performance from its Australian oversized parcel business, Allied Express.
Group performance and dividend increase
CFO Stephan Deschamps said the economic environment remained difficult, “especially in New Zealand,” but noted some improvement that supported same-customer growth alongside market share gains. On a consolidated basis, Deschamps reported revenue rose 8.5% to nearly NZD 720 million. EBITA (the group’s internal performance measure) increased 12.7% to NZD 96.5 million, while NPAT rose 17% to NZD 52 million.
Reflecting cash generation and balance sheet capacity, management increased the interim dividend by NZD 0.02 to NZD 0.21 per share, compared with NZD 0.19 a year earlier. The dividend will be fully imputed in New Zealand and about 46% imputed for Australian shareholders, Deschamps said.
Shift toward economy services in New Zealand
Chief Executive Mark and Express Package New Zealand head Aaron Stubbing said demand remained stronger for economy services than premium offerings. Mark described the cost difference between air-based premium delivery and road-based economy service as “pretty significant,” noting air freight can cost at least twice as much as equivalent road freight for an average parcel.
Stubbing said Express Package volumes increased 5.5% in the first half, driven by both same-customer growth and net market share gains, with international e-commerce described as “a meaningful contributor.” He outlined a mixed industry backdrop, with improvements in healthcare and third-party logistics (3PL) and “a little bit of an increase” in manufacturing, while retail, accommodation and food services, and education and training remained weak.
In response to an analyst question on pricing, management said premium services were still growing on a top-line basis, but CFO Deschamps added they were “not growing from a bottom-line point of view.” Stubbing said price increases were becoming “a little bit tougher” to achieve, but the company was still delivering about 80% of its guidance, while continuing to weigh customer value and cost recovery.
Project Evolve and operational initiatives
Management also discussed “Evolve,” a billing and courier pay transformation program aimed at modernizing systems and enabling more granular pricing. Mark said the program remained on budget at NZD 10 million all-up, while noting NZD 1.8 million higher costs in the first half compared with the prior comparable period.
During Q&A, management said Evolve spending was about NZD 2.8 million in the first half and expected total spend for the year to be roughly NZD 5.5 million. The company also outlined an expected ongoing licensing cost of about NZD 2 million per annum once implemented, with a possible NZD 1 million to NZD 1.5 million impact in FY2027 depending on timing.
Australia: Allied growth, air network transition, and Information Management headwinds
Management said conditions in Australia had been “pretty steady,” and described Allied Express as delivering double-digit top-line growth and even stronger bottom-line growth. Neil Wilson said Allied recorded volume growth of just under 14% versus the prior year, supported by growth from existing customers, new business wins, and service improvements aided by investment in larger depots and automation. He said Melbourne required a 9,000 square meter satellite depot to support volumes.
Executives said Allied’s B2C oversized niche tends to avoid the highest competitive intensity because mainstream parcel networks often do not want bulky freight that does not work on automated sortation systems. Management also emphasized selectivity on new business to protect margins, including use of improved margin models and updated rate cards to target sectors previously not addressed.
Wilson also updated investors on Freightways’ air network, which currently includes one 737-800 and three 737-400 aircraft. He said on-time performance was around 98% or higher, and the company expected the sale of Airwork (in receivership) to occur in the next few months. Freightways plans to modernize the fleet by transitioning to 737-800 aircraft with a spare 737-400 for peak periods or maintenance coverage around August. Wilson said the 737-800s provide uplift capacity (21 tons versus 18 tons for a 737-400) and about 15% lower emissions, with the transition expected to be cost neutral aside from one-off costs already provisioned in prior years.
In the Information Management division, Wilson said revenue was flat year-on-year. He attributed the main drag to the completion of a major Australian government scanning project at the end of the first quarter and a timing gap in new digital projects, which contributed to a roughly 14% decline in digital revenues. TIMG was described as having a strong pipeline, but projects were not timed to commence in the first half.
Shred-X restructuring and acquisition focus following VTFE deal
Management said the Shred-X business remained in a significant restructuring, including depot closures and headcount reductions, which resulted in one-off costs and constrained top-line growth. Wilson said about NZD 1.6 million in one-off restructuring costs were incurred in the half, but the initiatives implemented were expected to improve performance in the second half and beyond. Actions included rationalizing driver runs, using automation to reduce administrative work, and exiting non-profitable locations such as Canberra and Newcastle in favor of centralized processing. He also said Shred-X exited certain low-margin or unprofitable workstreams and implemented price increases of around 5% to 7% depending on service.
On the Q&A, management said it expected Shred-X to “roughly double” its second-half EBIT versus the first half as restructuring initiatives take effect, with the bulk of costs already incurred.
The company also provided more detail on its recent acquisition of VT Freight Express (VTFE) in Melbourne, described as an asset-light, road-based B2B express business similar to New Zealand’s Post Haste. Deschamps said the price tag was AUD 71 million, with AUD 50 million raised through a bridge facility while the company assesses final funding. He added VTFE would increase net debt to EBITDA by about 0.2x.
Mark said Freightways’ M&A focus is narrowing toward targets closely adjacent or complementary to Allied and VTFE, following review of 40–50 Australian transport businesses over the last year. He said a key early VTFE priority is strengthening interstate capability into New South Wales, where VTFE currently relies on partners that have not consistently met its service and data standards. Management said it is exploring options to start up, acquire, or partner to fill that network gap.
Looking ahead, management said it expects “steady” and “slow and steady” improvement in same-customer volumes, with a continued emphasis on margin initiatives, service quality, and disciplined M&A supported by a strong balance sheet.
About Freightways Group (ASX:FRW)
Express package, information management and waste destruction and renewal services
