Stobart reports profits of £23.9m

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Stobart Group has reported a pre-tax profit of £23.9m on sales of £431.1m following a string of acquisitions over the past year. These include the takeover and integration of James Irlam into Eddie Stobart and the takeover of WA Developments to form Stobart Rail. Stobart also took over the chilled business of Innovate Logistics to create Stobart Chilled as well as acquiring Southend Airport.

In the year to 28th February, the Eddie Stobart road transport and warehousing business contributed sales of £387.3m and underlying operating profit of £27.9m. James Irlam & Sons Ltd was acquired in April 2008 for £62.4m including costs.

The chilled business of Innovate Logistics was acquired in July 2008 for costs of £0.9m. The group closed three chilled sites to rationalise the operations and continue to monitor the chilled business separately and to review for further operational efficiencies.

In the rail business WA Developments was acquired for £10.3m including costs. The Division contributed external turnover of £38.2m and underlying operating profit of £3.7m.

A new £40m distribution centre is being built at Widnes, along with refurbishment of a 600,000 sq ft warehouse in Leicestershire and a railhead at Inverness.

The Ports Division contributed sales of £14.6m and underlying operating profit of £2.7m. The inland port rail terminal at Widnes started the year strongly but container throughput volumes were latterly affected by the economic slow-down.

Southend Airport was acquired in December 2008 and contributed sales of £1.7m. Plans for t the airport include a new railway station on-site, giving a direct rail link to central London to support growth of passenger and freight services.

Chief executive Andrew Tinkler said: “Stobart Group has a clear vision; over the medium term it aims to become the UK’s leading provider of multimodal logistics solutions.”

The downturn in the economy hadn’t affected Stobart in the same way as it had many others, said Tinkler.

“This is due to two key factors; firstly that our ‘pay-as-you-go’ cost model provides Stobart and its customers with less commercial risk and secondly because of the type of goods we move and store.

“For example, 66 per cent of the total goods handled are in the food and drink sector. We have seen a change in the type of products from premium brand to cheaper, own-label, brands but it has not significantly affected volumes. The area where we have been affected is the reduction in the number of Far East imports. We have seen reduced volumes in our inland port operations and have made some changes to de-risk impacts from this.”

The group’s strategy is based on the belief that “customers are not so concerned about the mode of transport used, they need to know you can deliver and provide value.”

Tinkler said: “In terms of challenges as a whole, I think that there could be more done to achieve greater collaboration. The road transport industry is highly fragmented: the Department for Transport estimates that 45 per cent are one-vehicle operators and only 0.3 per cent have more than 100 vehicles. With 1,800 vehicles, Eddie Stobart Ltd is in a unique position. The business will continue to collaborate with smaller hauliers where there is a gap in its national network.”

Looking ahead, Tinkler said: “We will grow, but we will also be mindful of risk to ensure the right decisions are made. In terms of growth, the UK still presents us with opportunities, as Eddie Stobart has less than a 2 per cent share of the total road haulage business in the UK, and there are also good opportunities in continental Europe and Ireland.

“The Group has extensive assets that have great potential and we will focus on the development of the Rail, Ports and Air Divisions and continue to deliver operational synergies, remove waste and improve efficiency.

“I see next year as a period of consolidation, when we will work hard to demonstrate our model to existing and new customers, develop the skills of our people and continue to create value for our shareholders,” he said.


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