TIDMESL
RNS Number : 7084B
Eddie Stobart Logistics PLC
12 October 2020
12 October 2020
Eddie Stobart Logistics plc
(the "Company")
Trading Update of Associate Company
Return to profitability - progress on turnaround
Eddie Stobart Logistics plc (the "Company") has been notified by
its 49% indirectly owned associate GreenWhiteStar Acquisitions
Limited ("GWSA"), the holding company of the Eddie Stobart, iForce,
The Pallet Network and The Logistics People businesses (the "GWSA
Group"), that it has published the following statement on its
website:
William Stobart, Executive Chairman of GWSA, commented:
"I am pleased to be back leading the GWSA Group. These results
show we have put past challenges firmly behind us. The past six
months have shown the strength of our differentiated business model
which has allowed us to grow existing customer relationships, win
new business, return the GWSA Group to profitability and overcome
challenges presented by Covid-19. Looking ahead, we are confident
that our renewed focus on our historic core capabilities as
transport and logistics services provider for the FMCG and grocery
sectors, and as a leading player in e-commerce logistics and
fulfilment, will allow us to drive profitable growth going
forward."
Financial Highlights
HY results (GBP 31 May 2019
millions) (1) 31 May 2020 (2) Change
------------------- ------------ ------------ -------
Revenue 416.5 421.1 (1.1%)
Underlying EBITDA
(3) 16.6 (6.3) 363.5%
Underlying EBIT
(3) 10.6 (11.6) 191.4%
-------------------- ------------ ------------ -------
(1) All financials are stated before the application of IFRS
16.
(2) The comparator stated is the results of Eddie Stobart
Logistics Plc which owned 100% of GWSA prior to 9 December 2019 and
included the operating businesses within its consolidated
results.
(3) Underlying EBITDA is defined as Underlying EBIT before
depreciation of property, plant and equipment. Underlying EBIT is
defined as profit from operating activities before exceptional
items, amortisation of acquired intangibles and includes the
Company's share of profit from equity accounted investees as well
as a gain of GBP3.9m in 2020 arising from the exit of a leased
property and in 2019 it is stated before the costs of employee
share costs funded by previous parent holding group, charges to the
income statement relating to the management incentive plan and
long-term incentive plan.
-- Strong performance against the backdrop of Covid-19, with the
business benefitting from increasing demand for high quality
logistics and transport services
-- Revenues of GBP416.5m broadly in line with the same period
last year reflecting resilience of business model
-- Increased profitability from existing and new customers
replacing revenue from exited loss-making contracts
-- Business returned to profitability reflecting progress on
turnaround plan with further benefits expected to come
-- Underlying EBITDA for the period of GBP16.6m (2019: loss of
GBP6.3m) and underlying EBIT of GBP10.6m (2019: loss of GBP11.6m)
(1,2,3)
-- Net debt at 31 May 2020 of GBP242.7m compared to GBP236.9m at
the time of the DBAY transaction, reflecting non-recurring
re-organisation costs and investments
-- Generated positive operating cash flow in the period and
initiated repayment of debt since period end
-- As proposed at the time of the DBAY transaction, the
intention remains to offer Eddie Stobart Logistics plc's
shareholders the opportunity to re-finance the PIK note loan that
was used as part of the December 2019 refinancing of the business
as soon as is practicable
-- Outlook: Underlying EBITDA in excess of GBP33m (pre IFRS 16)
and reduction in net debt expected for the year to 30 November
2020
Operational Highlights
-- Initial phase of business re-organisation now complete:
significant reduction in cost base through increased use of
internal capabilities
Eddie Stobart:
-- Increased warehouse utilisation and reduction of property rental liabilities
-- Focus on attention to detail and customer service which has
strengthened our unique business model
-- New business wins in the UK with Wm Morrison, Hillebrand,
McBride and in our EU business with Nike and Amazon
-- Exited non-core activities and loss-making contracts
-- Investment through the purchase of the "Eddie Stobart" and "Stobart" brands
iForce:
-- Centralised the company's activities into our 850,000 sq.ft.
National Fulfilment Centre in Corby
-- Maintained excellent customer service and gained new volumes throughout Covid-19
The Pallet Network:
-- Record breaking pallet volumes in the company's history
whilst maintaining customer service levels
-- Extended the central cross-dock hub by 75,000 sq.ft.
-- Invested in new branding for the business with our Partner Powered Alliance
Logistics People:
-- New management team have increased their supply of labour to
GWSA Group and grown external sales
Further enquiries:
Eddie Stobart Logistics plc via FTI Consulting
FTI Consulting (0)20 3727 1017
Nick Hasell / Alex Le May / Matthew O'Keeffe
Cenkos Securities Plc (Nomad & Broker) (0)20 7397 8900
Nicholas Wells / Giles Balleny / Harry
Hargreaves
Half Year 2020 Results Summary
The GWSA Group reported revenues of GBP416.5m (2019: GBP421.3m)
during the six months to 31 May 2020 (2) . The performance was
broadly in line with the previous year and reflects the strong
performance in the FMCG and grocery sectors, which have offset
lower volumes in sectors which have been impacted by Covid-19, and
the revenue reduction resulting from the exiting of loss-making
contracts.
During the period, the initial phase of the business
re-organisation was successfully completed, resulting in a return
to profitability with underlying EBITDA for the period of GBP16.6m
(2019: loss of GBP6.3m), before the impact of IFRS 16 (1,2,3) . The
business also reported positive underlying EBIT of GBP10.6m (2019:
loss of GBP11.6m) (1,2,3) . The turnaround in profitability was
driven by a significant reduction in the cost base through the
increased use of internal capabilities such as the recruitment of
drivers and warehousing staff, the streamlining of duplicated roles
within the organisation, and the replacement of loss-making work
with profitable volumes from existing and new clients. In addition,
an increased focus on the warehousing portfolio has led to improved
utilisation levels, with available space taken up by a number of
blue chip customers.
Net debt at 31 May 2020 was GBP242.7m compared to GBP236.9m at
the time of the DBAY transaction. This includes the non-recurring
costs of the re-organisation of the group and the continued
investments made during the period to strengthen the business going
forward. The operating cash flow during the period was positive and
debt repayments have been initiated since the period end.
A highlight for the period was the acquisition of the "Eddie
Stobart" and "Stobart" brands, at a cost of GBP10m, which will
deliver future brand license fee savings of GBP3m per annum and
allow the group to further differentiate the business from its
competitors.
The business has also seen a reduction in property rental
liabilities, and the team is actively pursuing other opportunities
to reduce cash outflows, such as the reduction of GWSA's interest
in SpeedyFreight, from 47.5% to 20% to avoid future payment
obligations, which was announced post period end in August
2020.
Divisional overview
An overview of the HY results for the main divisions of the
Eddie Stobart business is set out below:
Underlying Underlying
HY 2020 results (GBP
millions) (1) Revenue EBITDA (3) EBIT (3)
---------------------- -------- ----------- -----------
Eddie Stobart 309.5 6.5 1.4
iForce 46.6 6.6 6.0
The Pallet Network 62.6 2.3 2.1
The Logistics People 30.2 2.7 2.6
Other (4) (32.4) (1.5) (1.5)
----------------------- -------- ----------- -----------
(4) Includes holding companies, consolidation adjustments and
income from associates.
Eddie Stobart is a leading supply chain, transport and logistics
business, providing services to many of the UK's best-known brands.
The business runs the largest FTL network in the UK, with over
2,200 trucks and 3,500 trailers, operates 6 trains per day, and
provides warehousing services from over 20 sites with over 6m
sq.ft. of storage space. Our EU business also provides transport
and warehousing services from various sites in continental Europe.
The business has benefited from its exposure to the FMCG and
grocery sectors as well as from a growing demand for warehousing.
Trading was strong including during the Covid-19 lockdown, and
notable contracts were secured with Nike, Amazon, and after the
period end from Wm Morrison.
iForce provides e-commerce logistics, fulfilment, returns
processing and carriage management solutions for some of the
leading brands and retailers in the UK. The business is performing
strongly and is benefitting from exceptionally high demand for its
services due to the recent accelerated growth in online sales in
light of the Covid-19 situation, which has resulted in a number of
new business wins from well known brands.
The Pallet Network is one of the largest high quality palletised
distribution service providers in the UK, with sector-leading IT
systems and over 120 regional transport partners operating from
over 150 locations. After seeing volumes decline at the start of
the Covid-19 lockdown period, the business has rebounded swiftly
and is currently delivering record pallet volumes while gaining
market share.
The Logistics People is a temporary staff provider to the
logistics industry, specialising in the recruitment of drivers and
industrial workers and provision of site security, managed from a
centralized 24/7 monitoring suite. The company has successfully
navigated the unexpected demand volatility during the period and
continues to trade strongly.
Full year expectations
For the year to 30 November 2020 the Group expects to achieve an
underlying EBTDA in excess of GBP33m (pre IFRS 16) and intends to
continue to focus on reducing net debt.
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