Revenue up 47.3% and NPAT up 88.9% but cash conversion slipped to 70.8%

Revenue rose 47.3% to $5.2b (50.8% on an FX-adjusted basis), EBITDA rose 52.3% to $711.0m, and NPAT rose 88.9% to $355.4m, with PBT up 86.5% to $489.4m on a slightly lower effective tax rate of 27.4% versus 28.3%. Operating cash flow rose only 33.9% to $503.8m, materially behind earnings, because trade debtors expanded 64.7% to $805.6m and working capital absorbed $316.4m. Air & Ocean is now the largest division at 52.1% of revenue ($2.7b). Net debt fell to $1.1m from $102.2m, ROE lifted to 24.9% from 16.9%, and the declared final dividend doubled to 87.0 cents versus 45.0 cents.

Capital raise adds balance-sheet context, with NZ$494m capital raised, but borrowings and gearing are the direct leverage evidence.

OCF/EBITDA fell to 70.8% from 80.6%, and FCF/NPAT collapsed to 87.5% from 137%. Receivable days extended six days to 56.4. This matters because it tells you a chunk of the reported earnings step-up is sitting in the receivables book rather than in cash, and the read on durable cash generation is weaker than the NPAT print implies.

Air & Ocean now dominates the mix. The segment contributed 52.1% of revenue and a derived gross margin of 9.2%, so a large share of FY22 earnings is exposed to international freight rate conditions that prevailed during the year. This matters because the read on through-cycle earnings power depends on how much of FY22 revenue reflects rate inflation rather than underlying volume.

Balance sheet and returns stepped up sharply. Net debt is effectively eliminated and net debt/EBITDA sits at 0.00x against 0.22x prior. ROE of 24.9% is well above the 16.9% prior year. This matters because it gives Mainfreight unusually wide capital flexibility heading into a freight environment that may turn.

Against the interim shape, FY22 was second-half weighted: HY22 contributed 43.6% of full-year revenue, 40.2% of EBITDA and 36.8% of NPAT, so the second half drove a disproportionate share of profit.

The unresolved expectations question is how much of the second-half profit acceleration reflects freight rate conditions versus structural earnings power. The release does not separate price from volume, so a reader cannot tell from this filing how exposed FY23 earnings are to rate normalisation.

Management states there were no abnormal items in F22 or F21, the PBT-to-NPAT growth gap is only 2.4pp, and the effective tax rate moved only 90bps, so the headline NPAT growth is not flattered by one-offs or tax. Against that, OCF/EBITDA dropped roughly 10pp and $316.4m of operating working capital was absorbed, with receivables alone up $316.3m. The cash result is real but a smaller multiple of EBITDA than last year.

Reinvestment also stepped up. Capex rose 62.6% to $192.9m (3.7% of revenue versus 3.3%), so FCF pre-lease grew 20.6% to $310.9m even as NPAT nearly doubled. The full-year dividend at 142.0 cents represents 46.0% of FCF pre-lease against 17.6% prior, so the payout is comfortably covered by current cash generation but the cushion has narrowed.

This briefing cannot assess how much of FY22 profitability is structural versus cyclical because the release does not split revenue between rate and volume or provide forward freight-rate or forward-work context.