Stobart Group has reported a small rise in underlying operating profit to £19.8m for the first half, despite sales slipping back from £281.1m to £278.5m.
CEO Andrew Tinkler said: “We have worked hard to improve margins and profitability in our core transport business despite tough trading conditions. We are well underway with delivering the stated plan for the group.”
Sales in the Transport and Distribution fell 5.6 per cent to £251.1m but margins improved by 10 per cent to give a divisional profit before tax of £14.2m.
The group said market volumes had been affected by economic conditions which had resulted in consumer retail volatility putting pressure on operations. In addition, customers’ volume forecasts continued to exceed actual volumes.
Stobart improved transport and distributions margins through more effective financial control and cost management. In lower margin contracts it had improved pricing rates and in some cases rationalised routes.
Stobart incurred £4.2m in restructuring costs for the chilled business in a move to create a smaller more profitable operation. Sites at Corby and Alcester were closed and the fleet size reduced.
The company said the restructuring had been more challenging, costly and further reaching than first planned owing to challenging economic environment. It expects to complete the process in the second half incurring similar costs to the first half.
The Autologic acquisition came towards the end of the reporting period and will be included in the Transport and Distribution segment going forward.
Looking ahead the group said the Transport & Distribution division was set to maintain margins. The Autologic business would contribute fully in the second half and there are opportunities for synergies in both businesses.