Bibby Line’s profits run aground
LIVERPOOL-based shipping and distribution group Bibby Line saw its pre-tax profit before exceptionals drop by 32% to £21.8m last year despite increasing sales by £55m to £1.09bn (2008: £1.03bn).
The figures are revealed in newly-filed accounts for 2009 which state that lower operating profits at the family-owned firm were a result of “harsh trading conditions experienced by certain of our businesses”.
The 203 year-old company said that its offshore oil and gas and marine divisions were particularly affected, where freight and asset utilisation rates rates suffered. Its distribution division’s pallet network also saw fewer volumes.
Despite this, Bibby managed to continue its organic growth, but was thwarted in its acquisition plans – most notably in its bid for convenience store buying group Nisa Today’s, which it wanted to add to its Costcutter empire.
After the deal collapsed, the firm had threatened to withdraw Costcutter from the buying group.
A review of operations accompanying the accounts, written by managing director, Sir Michael Bibby, said that the group was still “assessing the various options for supplying products to Costcutter members”.
“We had the appetite to acquire other businesses and secure major new assets but very few of the many opportunities we reviewed were concluded,” he said.
“I believe that this was largely due to the uncertainty in the global economic outlook which meant that when it came to the crunch most people shied away from taking big decisions such as selling their businesses or changing key suppliers.”
He said that such failures could eventually prove to be positive as asset prices are still declining and the group has managed to increase its cash position, pay down debt and carry out major capital programmes.
Bibby added that its Financial Services division, which provides factoring and invoice discounting services to SMEs, has experienced a “ large increase” in customer demand since May 2009 as banks remain risk averse in lending to smaller firms. By its year end, the division’s deal numbers had increased by 24%.
Bibby Line Group finished the year with net assets of £183m (2008: £175m) and its long-term debt was cut by £88m to £328.7m. Sir Michael said that the group had “ample capacity to expand each business.
“We intend to continue to invest, not just in developing our existing successful services businesses, but also once again in cyclical businesses, such as shipping, as we see the recovery starting”.
