Stobart lays foundations for strong growth in second half

LOGISTICS and transport group Stobart has announced a marginal increase in half year profits and a 9.5% rise in revenues after what it called a period of consolidation and integration.

The Warrington-based company grew revenues to £218.2m for the six months to the end of August, compared with £199.2m a year earlier. Pre tax profit stood at £11.07m, a slight improvement on the £11.03m it made a year earlier.

It also announced a new €13m contract win with Tesco in Donabate, Ireland.

Stobart Group also suggested that it may begin to sell off certain assets as the market improves, to reinvest the capital in future developments, adding that it would announce any plans by the end of the year.

The group’s balance sheet has net assets of £289.8m, a £10m improvement on six months earlier.

But non fleet-related net borrowing was up considerably at £103.4m, compared with £67.3m six months earlier. The group said this was down to asset-backed loans of £29m, to part fund the new chilled distribution centre at Widnes, and £5m to part fund the acquisition of Stobart Air.

Andrew Tinkler, chief executive, said the results demonstrate stability and performance against a background of economic recession.

He pointed to strengthening volumes, resulting from new contract wins recently signed with Tesco, Nestlé and the launch of new rail services such as the distribution from Valencia to the UK of temperature-controlled fresh produce.

He said: “We expect a strong performance in the second half focusing on organic growth via new business wins and action already taken to reduce costs with the completion of the integration of Eddie Stobart and James Irlam.”

The second phase of integrating James Irlam into the business is anticipated to make savings of £500,000 this financial year, with an annualised impact of £1.1m.

Stobart said that although the division has been faced with the tough economic conditions, new business totalling around £30m was secured during the period and no customers were lost.

Chairman Rodney Baker-Bates added: “We expect that the new business wins and recently announced contracts will deliver strong growth in performance in the second half of the financial year.

“We will also continue to review our ongoing cost base and to identify operational efficiencies. This, along with the breadth and quality of our service offering will, we believe, enable us to continue to grow the group’s revenue and profitability.”

The company said it will pay an interim dividend of 2p per share.