Xpediator warns that profits will be below expectations

Xpediator has warned that pre-tax profit are expected to be “materially below market expectations” this year.

In a trading statement, the company said revenue was on course to top £200 million for the year to 31st December 2019. It highlighted a number of factors affecting profits for the year.

“As a result of a large customer recently giving notice in respect of its contract with Xpediator’s UK logistics division to use the warehousing facilities at Braintree, the board has decided to take the opportunity to invest in the warehouse so that it is suitable for higher value fulfilment business rather than lower margin storage activities. This re-configuring of the Braintree warehouse will entail a loss of business while the proposed investment is carried out over the next few months.

“In addition, Import Services Limited, part of the UK logistics division, has suffered an increase in labour rates which it has been unable to pass onto customers.”

The e-commerce business, EshopWeDrop, has generated lower volumes in the current year while continuing to invest in developing its franchise model in further geographies.

And turnover in Regional Express is currently tracking below that achieved in 2018 which has impacted upon profitability this year. “However, this is largely as a result of management focussing attention on securing two valuable and strategic contracts which is expected to generate a material and sustainable profit growth in 2020 and beyond,” the group said.

On the positive side, it said the turnaround of Benfleet continues, Anglia is performing strongly and the Romanian Pallex business and Affinity are also trading well.

Chief executive Stephen Blyth said: “We are disappointed to be below our profit targets for this year, however, critically customer demand for our services remains strong reflected in our continued sales growth which, together with the investments we have made across the business, particularly into information technology makes us confident in the Group’s future growth prospects for 2020 and beyond.”