Eddie Stobart Logistics has warned that first half profits are likely to be at the lower end of management expectations despite a 25 per cent increase in sales.
In a trading update, it said: “This is partly due to slower than anticipated productivity improvements in our Contract Logistics and Warehousing business and the short term adverse effect on the operational efficiency of our transport network from exiting, in early March, a problematic contract. However, as in previous years our volumes will be weighted substantially towards the second half of the year and the Company expects to deliver full year results in line with the Board’s expectations.”
It also revealed that following the appointment of a new chief financial officer, Anoop Kang on 1st April, a review has been carried out into the group’s prior year financial statements.
“This review has highlighted matters which will be addressed by means of a Prior Year Adjustment. The likely cumulative effect on the results for the year ended 30 November 2018 will be to reduce adjusted EBIT by approximately £2m. There will be an adjustment to retained earnings as at 30 November 2017 of approximately £11.5m, primarily relating to the lease accounting involving four legacy sites. The majority of these adjustments are non-cash and do not affect our banking covenants. Although the 2019 adjusted EBIT impact of these matters is £1.6m we expect to deliver a full year result in line with the Board’s expectations. Further details will be included in our Interim Report.”
The first half increase in revenue is down to a mix of organic growth and the full first half contribution from The Pallet Network, the company said.