Haulage group replaces chief executive with immediate effect

Warrington-based logistics group Eddie Stobart this morning announced the replacement of its chief executive, and warned adjusted earnings before interest and tax will be “significantly lower” than antipated.

It said, as a result, it will also review the group’s current dividend policy.

In the meantime, trading in the group’s shares on AIM has been suspended, and it warned that its interim results announcement due next week will be delayed until early September.

In a statement to the stock exchange this morning, the group said Alex Laffey will stand down as chief executive of the group with immediate effect, to be replaced by Sebastien Desreumaux, currently chief executive of iForce and head of contract logistics.

He is expected to be appointed to the board in due course.

This morning’s statement said: “As part of the group’s review carried out in conjunction with the group’s auditors in relation to the interim results, the board is applying a more prudent approach to revenue recognition, re-assessing the recoverability of certain receivables, as well as considering the appropriateness of certain provisions.

“While revenue expectations for the first half are broadly in line with previous guidance, the full impact of these items on adjusted EBIT is unclear, but it is likely to be significantly lower than anticipated at the time of the half year trading update on 9 July 2019.

“As a result, the board also intends to review the group’s current dividend policy.”

The statement continued: “Pending clarification of the impact of these items, the group has applied to suspend trading of the company’s ordinary shares on AIM, which will be effective from 7.30 am today.

“The group previously announced that the company would release its interim results for the six months to 31 May 2019 on 29 August 2019.

“However, the ongoing review will result in a delay to the publication of the group’s interim results, and it is now anticipated that the group will release its interim results in early September.”

It added: “The board has full confidence in the ability of Eddie Stobart’s management team to deliver an improved performance for the group going forward, and remains confident in the strength of the underlying business.”

Mr Desreumaux, who joined Eddie Stobart in 2018, has extensive experience in the logistics sector, including 20 years spent with Norbert Dentressangle, now part of XPO Logistics.

During his time at Eddie Stobart, he has driven the integration of iForce’s e-commerce expertise with the wider capabilities of the group and, since taking on a wider role as head of contract logistics and warehousing, has achieved significant productivity improvements in this business segment.

Last August the business reported a 25.3% increase in turnover of £359.3m in the six months to May 31, while last year’s £7.583m pre-tax loss was turned into a £2.862m pre-tax profit.

Russ Mould, investment director at Manchester investment platform AJ Bell, said: “The distinctive livery on its lorries may have raised a nostalgic smile as you passed them on the motorway, but shareholders in Eddie Stobart Logistics might end up honking their horns in frustration after today’s news.

“The shares are suspended and CEO Alex Laffey is gone as the company fails to publish its first half results on time.

“The company references a need to make changes to revenue recognition, receivables and provisions in a statement which roughly translates as ‘we were at best too aggressive with our accounting’.

“No surprise then that adjusted profit is expected to be significantly lower than expected when the numbers are eventually published in early September.

“These developments, and an earlier admission that 2018 profit had been overstated by £2m, follow the appointment of new finance chief Anoop Kangits. This at least suggests the company’s financial controls might have more rigour going forward.

“First, investors must wait to see just how bad the damage is in the short-term. And then will look to see if Laffey’s replacement, head of its iForce unit Sebastian Desreumaux, and Kangits, can steer Eddie Stobart back on course.

“The news will be seen as a further blow to embattled fund manager Neil Woodford, who is a major shareholder in the company.”