Freight management services provider Xpediator saw its pre-tax profit drop 23 per cent in the first half of 2019 after it had to make a number of measures to address its profitability.
Turnover for the six-months ending 30 June rose 29.8 per cent year-on-year to £102.4 million (H1 2018: £78.9 million), of which Xpediator put down £8.1 million to organic growth and £15.4 million to acquisitions.
Pre-tax profit stood at £2 million (H1 2018: £2.6 million) with Xpediator stating that the reduction was due to certain challenges in UK logistics. It added that the year-on-year fall was due to additional investment in personnel and IT and higher than expected losses from its e-commerce business EshopWeDrop, albeit offset by improved contribution from all operating divisions.
It reported in July that pre-tax profit would be “materially below market expectations”.
Chairman Alex Borrelli said: “In the first half of this year, we faced challenges in our e-commerce businesses and in UK logistics which have and will reduce our profitability in the current year.
“The Board has assessed the e-commerce opportunity and based on current expectations of 1 year, 1 to 2 and 2 to 5 year plans, concluded that it is right to continue to invest in the e-commerce division in the second half of 2019.“
In the first half of the year Xpediator has re-configured its UK warehousing in Braintree for new incoming customers, and to enable higher value fulfilment work over lower margin storage activities.
In Eshopwedrop it has invested in increased digital marketing, implemented greater GDPR controls and continued growing its franchise model in further geographies.
“Despite the challenges incurred, our core businesses have performed strongly, generating good revenue growth and demonstrating the underlying strength of the business,” added Borrelli.
Xpediator also said that there was “potentially a significant opportunity” for its freight forward division in delivering custom clearance activity once the UK leaves the EU.