Stobart ‘robust’ in challenging times

STOBART Group, the haulage, property, airports and biomass company, posted a modest increase in half year operating profits after earnings in its biggest division were hit by the challenging retail climate.

The Carlisle and Warrington-based group reported a 1.5% increase in operating profits from £18.7m to £19m in the six months to the end of August on revenues up 15.3% at £281.1m.

Pre-tax profit -including goodwill and interest charges – fell to £14.7m from £15.4m while underlying pre-tax profit rose 6.5% to £16.4m.

Profits in its transport and distribution division – the largest in the group – fell from £15m to £13.7m, despite growth in turnover of £35m to £265.9m, as a result of volatile demand.

Chief executive Andrew Tinkler said: “Against a difficult economic background, our transport and distribution business has been hit because of our customers reacting to changing patterns in consumer spending.

“In particular, more retail promotions caused volumes to fluctuate, which created problems for us in planning our loads efficiently. As a result our profits were down.”

He said management had responded ‘swiftly’ to this hurdle by improving business information systems, which has enabled a faster response to emerging issues, made the fleet more efficient and will ultimately allow it to provide better customer service.

In May Stobart raised £114m before expenses via a placing of 83 million shares. The funds will be used to develop property assets within the group. At the same time a new divisional structure comprising transport and distribution, air, biomass, estates and infrastructure and civil engineering.

Stobart described its half-year performance as ‘robust’ despite the tough market for transport. The group held its interim dividend at 2p.

Andrew Tinkler added: “Our new strategy is being implemented and we are well positioned to deliver strong results in the medium term.”

“As a result of the actions we have taken in Transport and Distribution we expect to report further progress in the second half. The board’s outlook for the year is broadly unchanged despite the tough environment”.