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Last updated: October 20, 2010 5:36 pm
Government austerity measures such as spending cuts and the VAT rise will hit full-year profits at Stobart, the logistics group said, in spite of announcing improved first-half sales and pre-tax profits.
Andrew Tinkler, chief executive, said he was cautious, especially with a VAT rise in January, which is typically a quiet time for hauliers. But he said the group would continue to improve efficiency and its contracts with the likes of Tesco and AG Barr would shield it from the worst.
“People still need to eat and drink and that is mostly what we transport,” he said. He said the government’s cuts were vital to stabilise the economy, which would be good for the business. “There is going to be pain in the short term to get long-term gain.”
However, the City was not impressed, pushing the shares down 8.3 per cent, or 13p, to 143½p.
Eddie Stobart, the haulage group famous for its green and white liveried lorries that have a dedicated “spotter’s club”, has outperformed most rivals in the recession and still accounts for about 85 per cent of group revenues.
Mr Tinkler said its ability to share loads for different customers improved efficiency and has resulted in contract wins, including a £25m deal with Tesco for chilled food and an €18m (£15.8m) deal with the supermarket’s Irish arm.
Just 17.1 per cent of journeys were empty trucks, although customers’ recent desire to shorten lead times to deal with volatile consumer spending had been a challenge, he said.
In the six months to August 31, revenue from continuing operations rose 12 per cent from £218.2m to £243.7m and pre-tax profit increased from £11.1m to £15.4m. Last year’s figure included a £1.3m exceptional loss.
Earnings per share from continuing operations rose from 3.75p to 4.57p, and the interim dividend is maintained at 2p.
Mr Tinkler has turned Stobart into a multimodal group with port, rail and air activities. It is upgrading Southend airport from a site for aircraft maintenance and private business jets, into a fourth London hub with a railway station.
It said it was in talks with several airlines including Aer Arann, the Irish carrier, which has agreed a conditional five-year operating deal with volumes expected to rise to 300,000 passengers a year.
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