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Challenging times hit margins

London, UK: Margins are still under pressure in the temperature-controlled sector with customers resisting price rises, according to logistics firms.

Cold Chain News reports in its latest issue out today that Rochdale-based Yearsley Group boosted turnover and profit but warned that the financial year to the end of March this year was challenging. The group’s directors’ report says: “The cold chain logistics division has again experienced extremely tough trading conditions, in line with customers looking to offset price increases for raw materials and other associated costs.”

The company, which is currently investing £20m into its plant in Heywood, recorded revenues of £143.6m in the year to 31 March 2012, up year-on-year from £121.9m. Operating profit also rose, from £3.86m to £4.76m, while pre-tax profit climbed from £2.25m to £3.22m.

At the same time Fowler Welch is “trading in line with expectations in a sector that continues to experience tight margins” says Philip Meeson, chairman and chief executive of Fowler Welch’s owner, Dart Group, in a trading update. “What’s very difficult is to get price rises,” says Meeson. “Fuel costs are passed on… but other prices are difficult to pass on as they are in aviation.”  Current market forecasts are for full-year pre-tax profit of about £30m and earnings per share of 16p.

The Stobart Group saw pre-tax profit fall in the six months to September from £17m to £12m because of the restructuring costs following its acquisition of chilled distribution company Innovate Logistics. Stobart, which bought Innovate in 2008, is in the middle of integrating staff and reducing capacity. “This restructuring has been more challenging, costly and further reaching than first planned,” the company says. However, Stobart believes it would be complete by the end of the financial year. Overall, Stobart Group sales dropped from £281m to £279m in the six months.

Norbert Dentressangle saw revenue grow 10% year-on-year through the first nine months of 2012, up to €2.64bn (£2.11bn), a result boosted by acquisitions made in 2011. The transport division posted revenue of €1.5bn (£1.2bn), up 5.1% on 2011, while its logistics business saw growth of 13.7% to €1.3bn ( £1bn).