Mainfreight’s revenues have risen since April 1 despite Covid-19 as it reports higher annual profit and stable dividend, and repays $10.6m wage subsidy. NZX 50 back to March 9 level

Bravo: Freight and logistics company Mainfreight was the toast of the sharemarket yesterday after declaring an unchanged final dividend of 34 cents for the year ended March 31 as well as announcing that it had returned the $10.6 million wage subsidy it received in April on behalf of its 1,526 New Zealand staff. Its shares surged on the news posting a gain of 11.1 percent to close at $39.99.

Not as bad: Reporting under the NZ IFRS 16 standard for the first full year, pre-tax, interest and depreciation earnings were $398.67 million, from operating revenue of $3.1 billion. ‘Apples with apples’ EBITDA that adjusted for IFRS 16 was up 9.3 percent. Managing director Don Braid said that while the pandemic had dealt a significant impact and would continue to affect economic conditions, he noted that things hadn’t been as bad as he had initially feared.

Fortune favours the brave: Those investors brave enough to buy the shares at $24.00 on 23 March when the market bottomed have been handsomely rewarded with a 65 percent return in just two months.

Markets: The NZX50 surged through 11,000 yesterday as investors globally doubled down on their belief that the economies are beginning to return to normal, despite record unemployment rates and the collapse of many small businesses. Bank shares, which have underperformed the market up until now, were back in favour with shares in dual listed banks Westpac and ANZ surging 10.9 percent and 11.9 percent respectively.

Up in arms: Forestry owners are unhappy over the Government’s planned planned regulation of the industry. Earnslaw One said the regulation may in fact stall four projects it is considering to expand the firm’s processing capacity. CEO Paul Nicholls told Parliament’s environment select committee yesterday the potential powers the Government is seeking – to intervene in the log sales and contracts of forest owners – are “absurd” and go against any sensible business practices.

Farcical & rushed: Multiple submitters have told the committee the consultation on the Forests (Regulation of Log Traders and Forestry Advisers) Amendment Bill has been farcical and its rushed implementation under Budget urgency is an abuse of process. Some have even suggested Forestry Minister Shane Jones’ bid to try to ensure a predictable flow of logs to domestic processors is an effort to fix a problem that doesn’t exist.

The key stats: Forestry accounts for more than $6 billion a year from shipments of logs, panels, timber and wood pulp. Around 35 million cubic metres of wood is harvested annually, of which about 15 million cubic metres is processed here.

Red faces: An embarrassing privacy breach by online broker ASB Securities that left hundreds of online accounts able to be viewed and traded by users without permission has resulted in an $80,000 fine and a censure by the New Zealand Markets Disciplinary Tribunal. Remarkably, a total of 576 of its trading accounts were made vulnerable to unauthorised use over a 14-year period. Of the affected accounts, 37 were viewed and six were traded. The tribunal said the widespread vulnerability was a “serious breach”, despite the small number of actual occurrences, which opened the bank up to a maximum penalty of $500,000.

IRD outdoes the banks: The revamped Government small business loan scheme being managed by IRD is proving to be popular with small businesses owners who have borrowed almost $1 billion in the last two weeks. More than 55,000 businesses had applied for the loan funding with 95 percent already approved. The amount far exceeds the bank administered Business Finance Guarantee Scheme (BFGS) launched in early April, a month before the IRD-administered scheme, which had lent just $60 million to 376 businesses as of this week.

Cheap borrowing: The loans are for up to five years and are interest-free if repaid within a year after which an annual interest rate of 3 percent will be charged.

Low energy: Trustpower, has reported a 16 percent drop in pre-tax interest and depreciation earnings to $186.5 million for the March year. Retail earnings were affected by high wholesale prices for much of 2019, while maintenance outages also reduced generation earnings.

The company is forecasting slight growth in FY21 pre-tax earnings to between $190 million to $215 million. While it expects ongoing growth in its broadband business, commercial power volumes are expected to be down 35 percent due to the recent lockdown, while generation volumes are assumed to be down 3 percent on long-term averages due to low storage in the firm’s North Island dams.

Dividend cut: The company also reduced its final dividend by 1.5 cents a share, holding back about $4.7 million for extra flexibility should there be a further contraction in the economy later in the year.

Golden handcuffs: Having just filed for bankruptcy protection in the U.S., details are emerging that Hertz paid out millions of dollars in bonuses to its executives just before its bankruptcy became public — and a month after it started laying off thousands of employees.

How America works: Hertz paid a total of US$16.2 million to 340 executives on May 19 as part of a plan to keep them in place while the company attempts to reorganise, the company announced in a filing with the Securities and Exchange Commission. The executives will be required to return the money should they leave Hertz on their own before March 31, 2021.

‘It’s necessary’: CEO Paul Stone, who was promoted to the role three days before the retention bonuses were awarded, received US$700,000 under the plan, while the company’s CFO and CMO received a further US$790,000 between them. The company justified the payments as being necessary due to the “….financial and operational uncertainty that the company and its employees face.”

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Andrew Patterson is Newsroom's Markets Editor and has worked for decades as a financial journalist, radio presenter and editor with Australia's ABC, Radio Live and NBR.

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