Giri Tenneti: (GT) Hello and welcome to the latest in ASX’s "Getting to Know" video series. Today, I'm pleased to be speaking with Mark Troughear, the CEO of Freightways Group Ltd. ASX Ticker, FRW.

Mark has been the CEO of Freightways since 2018 and he's got a long track record with the company. He started with them in 1996 and has held a variety of roles with deep experience across all aspects of the company from sales and branding to operations and corporate oversight. Thanks for joining us today, Mark.

Mark Troughear: (MT) Thanks very much for having me.

GT: Freightways is a New Zealand-based company that listed on ASX in September 2023 and has a market capitalisation of around $1.39 billion Aussie dollars. The company is dual-listed in Australia and New Zealand, having listed on NZX back in 2003.

Now I'm telling you what you already know here. Freightways is an operator of Express Logistics businesses that operate highly efficiently and at scale. The company operates and invests where its core capability to pick up, process and deliver adds value. Freightways businesses handle over 100 million items every year and they are a very entrepreneurial company, always looking for opportunities to leverage their core business capabilities to grow new revenue streams.

Mark, I'm sure I've only just scratched the surface there. Tell us a little more about Freightways and the company's journey since he joined them in 1996.

MT:  So we celebrate our 60th year this year.  We started in 1964 as New Zealand's first express package operator. And so really what that was, was a courier network that would deliver overnight the length and breadth of the country that really enabled New Zealand's overnight banking system to get up and running.

So what we would do is pick up banking documents from branches, take them to processing centres in the middle of the night, allow it to be processed, get the information back to the branch the next day. And again, prior to this, we're going to be the overnight network.

The business has certainly developed a lot over the sixty years, so we do a lot more than courier these days. We're involved in temperature-controlled distribution, which again is express and requires absolute reliability.

We’re involved in information management, the storage of documents and data for key customers like hospitals, government departments and so on. And then we're involved in the waste renewal, which again involves picking up and processing items which generally can be recycled.

So yeah, the business has certainly grown and developed over those sixty years. We've gone from private ownership to being owned by an Aussie corporate private equity and then listed, as you say, around about 20 years ago on the NZX and last year on the ASX.

GT: Clearly it's been a busy few years, culminating in the ASX listing in September 2023 and you've also recently expanded and invested in some new initiatives. Could you talk a little about that?

MT: So the first point to note is, probably that we originally came into Australia in 2007. So in 2007, we acquired Data Bank, which was a small data storage business. 2008 we acquired ShredX, which was a document destruction business, and our objectives were really to help those two businesses drive to become either one or two in their respective markets.

It's enabled us in the last year to give them to express package in Australia, and I think that's really exciting because Express Packages in Aussie is a round of an 8 to $9 billion market in terms of revenue each year. The business we've acquired is Allied Express and we've known that team since 2005.

So it's been a long association, we've been good mates all the way through that period. And so what we knew we were getting was a quality business with good margins, a defensible position and a really strong ethic around service and performance, which mirrors what we have here in New Zealand. Allied Express is present through all the main sites in Australia. They provide a service typically delivering big and bulky products and that's a niche that not a lot of operators focus on in Australia.

So we're happy that we're coming into market number one in that particular position. We know we can keep growing it, we can grow it organically and through mergers and acquisitions and certainly, we think there's a number of businesses that are closely adjacent to Allied Express that over time perhaps we can fold into that platform. So yeah, look, we're really excited about what we can do in Australia. As I say, it's a very big market and we'll look to play in the areas where we know we can win.

GT: Freightways first listed in New Zealand in 2003 and it's now dual-listed on ASX. So what drove the decision to list on ASX?

MT: For many years we have at the end of full year come over to Australia and talk to the institutional investors in Australia about the Freightways story.

The reality is for many of those institutional shareholders, they can't participate unless we have a listing on the ASX as well. And so by listing on the ASX, we open up the opportunity for a lot of those funds to invest within Freightways.

I think that also makes sense is that as we're growing in Australia, more of our business exists in Aussie and it's around about a third at the moment by revenue and earnings, but we expect that to grow probably more quickly over the coming years just because of the sheer size of the opportunity here in Australia. I think it makes more sense that we do tap into Australia at a time to give Australian investors both retail and institutional, the opportunity to take part in the growth of the company.

The other thing you recognise as a third of our staff are based in Australia, so there's around about 2,000 Freightways people working for various brands who are domiciled in Australia. In New Zealand, we've always run employee share plans and given employees and contractors the opportunity to again have a stake in the company. So that's something we'd like to do in Australia as well, make those plans available to the staff and the teams that we have over here.

In short, we see Australia as a great opportunity. We know the market, we're been here for a fair while and I think as we grow it makes a whole lot of sense that we're represented on the ASX and give people the opportunity to invest in us.

GT:  Looking to the future. Tell us a little more about the Freightways' strategic objectives and how the ASX listing will contribute to your future growth aspirations.

MT: Freightways’ objectives have always been to grow profitably. That's what we've done over the past 60 years here in New Zealand. It’s finding ways of growing both organically and through acquisitions and getting a return from business and growing the business. So the objective will be the same, now that we have a bigger footprint in Australia, we look for those opportunities to keep growing organically, to have new business teams that are out selling the products and services we have, but also look where we can make the right type of acquisition that fits and generates a good return for us.

We typically have been very good at generating cash through Freightways, so debt has been a mechanism that we have used over many, many years. We tend to pay it down pretty quickly and gives us the ability to go again. But the reality is in Australia some of those targets may be larger and that could be an opportunity for us to look for a bit more equity to help fund the right type of deal in the right way, giving the right level of return.

But regardless, our strategy remains the same. It's all of our three horizons methodology, and to look for those organic and M&A opportunities to grow the business.

GT: Mark, it's been a pleasure hearing about Freightways, your listings journey and your plans for the future. Thank you for taking the time to talk to me today.

MT: Thanks for inviting me. Great to talk to you today.