I'd like to hand the conference over to Mr. Paul Millward, CEO. Please go ahead.
Hi, everyone, thank you for joining us today. I'm Paul Millward, CEO of MOVE, and with me is Lee Banks, our CFO. Today, we will talk through our performance and results in the first six months as we deliver on our four-year roadmap and our outlook for the second half. Lee will talk to MOVE's financial results. We will be happy to take your questions at the end of the presentation. The key outtake from the first half is the momentum we are seeing as we execute on our New Horizons roadmap. Our focus over the past 18 months has been very much on resetting and right-sizing our business, and structural benefits from this are now being delivered. We still have a lot of work to do as we move from reset to step up, but we're making good progress on our priorities for the year.
Pleasingly, we are on track to deliver on guidance, which is for positive full-year Normalized Earnings. Looking at a snapshot of our results, you can see the improvement over the past two years. Our numbers are still not where we want them to be, but they are going in the right direction. Revenue was down 5% year-on-year, primarily due to weak customer demand and activity across the transport and logistics industry, and particularly in the warehousing sector. The retail, construction, and hospitality sectors, where we have a lot of customers, have been soft. Specialists was also down year-on-year, which is purely phasing of projects to date. Normalized Earnings continue to improve, and we're up 98% year-on-year, with positive Normalized Earnings reported for quarter two. This was also the strongest quarterly result we've had since the end of FY 2022.
This gives us further confidence of delivering a positive Normalized Earnings result for the full year. Gross margin has also improved, primarily as a result of cost management and efficiency initiatives, and there's more that we are doing in this space. We've stayed very focused on price discipline and adding value through great service for our customers. It was a particularly challenging six-month period as economic headwinds continue to impact consumer spend, leading to reduced freight and warehouse demand. This has resulted in increased competitor activity, including unsustainable pricing by some market participants chasing share. The economic recovery went through a couple of false starts, and we haven't seen the improvement in demand we were anticipating, with customers in the retail, construction, and hospitality sectors particularly hard hit.
We are strategically expanding the diversity of our customer base, which will reduce concentration risk and will provide greater balance and resilience through the cycles. Demand for freight and logistics services will increase as end customers once again start spending and large projects come back online. In August last year, we introduced our four-year New Horizons roadmap. To recap briefly, this sets out our pathway to FY 2028 as we move through from reset to step up and then stand out. We have clear goals in place, and our focus is firmly on achieving those and becoming the preferred logistics provider in New Zealand. We are clear about what we need to do to deliver the value and performance that our shareholders expect from us. We have mostly completed the reset phase, and we're now moving to step up. The business has been right-sized. We have optimized the network.
We've had relentless focus on cash costs and efficiency, which have helped to improve our results and the balance sheet. We are winning with customers, both existing and new. We are now moving to step up with a focus on delivering customer value, operational excellence, and smart business growth. This will help to drive our earnings and improve our financial performance. We've made good progress on our priorities for this year, and I'll talk to some of these in the next few slides. Looking at our individual business units, Freight & Fuel division is now benefiting from the work we've done to reset the business and have delivered positive, normalised earnings for a second consecutive half year. In a low-demand environment, we've been really focused on productivity, and we've seen some positive traction on utilization, customer satisfaction, and reducing our cost to serve.
Cost management remains key, the next step up in the business will be driven by, firstly, increasing revenue, and secondly, further stepping up utilization. Market rates continue to be very tight, combined with low demand, it does set the sector up for a challenging period ahead. We have seen some customer attrition as a result, but we continue to be disciplined about pricing and focused on our value add offer. January was soft alongside disruption from weather events. February has picked up, and we're about to kick off with some large seasonal projects across several sectors. We've also picked up a large materials customer starting this month, who is trusting us with their port movements, coastal shipping, storage, and South Island distribution. Lastly, our partnership with Z Energy continues to perform really well, and we have a close working relationship with them.
Our warehousing team has done a good job of right-sizing the network, and cost management controls are in place alongside productivity initiatives. We've also invested in strong leaders across our key sites. However, the sector overall continues to struggle with excess capacity, and we're seeing irrational short-term pricing behavior. In addition, customers have reduced their stock holdings and reduced in response to lower consumer demand, and some have moved back to just-in-time models. Signing up a new warehouse contract is a big decision for customers and does take time, and currently it's a buyer's market. Our focus is on providing customer value through our team, the right locations, and access to our freight network. We have retained key customers alongside a small level of new business wins, and our team is very focused on increasing our market share to ensure that we fill our warehouses.
This division is in the very early stages of the turnaround, and there's still work to do. Our key drivers will be to win and market and build on our customer value proposition while still tightly managing costs. Our specialist business is very project-focused, and we did have a lighter first half, but we do have several large projects in the second half, and that's commenced well over the last couple of months. The international division delivered a positive result, with the Oceans trans-Tasman shipping service moving into profit, and it has validated the move to a new larger vessel and a time charter model. We have a core group of contracted customers which utilize the majority of capacity, and with a new cornerstone customer being on boarded currently, this business is looking positive. I'll now hand over to Lee, who will talk to our financial results.
Thank you. As Paul mentioned, weak market conditions continue to impact customer activity and demand, resulting in income for the period down 5% to NZD 143.7 million. Despite the softer revenue environment, both earnings and gross margin percentage improved, driven by disciplined cost management and efficiency initiatives. Net loss after tax is now close to breakeven and was an NZD 8 million improvement year-on-year. Operating cash flows were NZD 17 million, up NZD 8.1 million on the prior year, while disciplined working capital management and sale of surplus assets enabled us to reduce net debt by NZD 6.2 million to NZD 12.8 million. The board continues to closely monitor capital requirements and balance sheet flexibility to support our New Horizons four-year roadmap.
We recently agreed a term sheet for an invoice finance facility with the BNZ to commence 30 November 2026, replacing Pacific Invoice Finance. This will significantly reduce our cost of debt and will see us move back to a two-bank partnership with the ANZ and BNZ. Operating expenses reduced NZD 9 million year-on-year, driven largely by continued structural cost resets. Labor savings were approximately NZD 6 million, with a further NZD 3 million in operating costs. Transport costs as a percent of freight revenue were down 3.5 percentage points year-on-year.
Gross margin percent improved strongly despite the flat revenue result, highlighting the effectiveness of the cost- out and efficiency program. Gross margin percentage was up 1 percentage point year-on-year to its highest level since 1H23. These improvements strengthen our operating leverage and position us for further margin expansion as volumes return. Normalized Earnings improved 98% on the prior year, with three of MOVE's four businesses delivering profitable earnings as benefits are realized from the transformation plan. We remain focused on every dollar and on continuing to convert operational improvements into sustainable business earnings growth. Thank you, and I'll hand you back to Paul.
Thanks, Lee. To recap, the operating conditions were still challenging in the first half, which impacted customer demand, but we have made meaningful progress on productivity and efficiency as we've moved from reset to the step up phase of our roadmap. A lift in market activity and demand, alongside the structural improvements from the transformation plan and a strong focus on top-line growth, will position MOVE for further earnings improvement. While economic conditions are expected to gradually recover during 2026, we have yet to see any meaningful improvement, and demand remains subdued. We are therefore managing the current challenges with tight controls over cost and working capital and a focus on winning in the market.
Growing sales will be key. We will do this by increasing our share from existing customers, new business wins, and expanding our customer base across a wide range of sectors, which help us to counter the cyclical pressures. Rebuilding the warehouse business also remains a priority. Before we take questions, I would just like to acknowledge my team across New Zealand. The progress we have made wouldn't have been possible without their hard work, particularly in a tough market. I'd also like to thank our customers for their ongoing support and, of course, our shareholders. Thank you for listening. We're now happy to take questions. Over to the operator.
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We have no online questions at this time.
Thank you. As there are no further questions at this time, I'll now hand back to Mr. Millward for any closing remarks.
Cool. Hey, thank you for dialing in today. We appreciate your support. Hopefully, you see we're making meaningful progress. Of course, I'm available for any questions, as is Lee Banks, if anyone has any questions for us. Wish you a happy.