Logistics group Eddie Stobart hit by costs that push margins down

UK haulier posts lower than expected full-year profit as it integrates new customers

Eddie Stobart, the UK logistics group, reported a strong revenue performance but lower than expected profit growth and falling margins in 2018, caused in part by the cost of new contract wins.

The company, recognisable by its green and red lorries, increased its full-year revenue 35 per cent to £840m. But earnings before interest and taxes fell below forecasts of £57m, rising 14 per cent to £55.3m. The underlying ebit margin fell from 7.8 per cent to 6.6 per cent because of the cost of integrating new customers into their network.

New contracts awarded this year, including PepsiCo and Cemex, led the company to “suffer indigestion”, according to analysts at Cenkos Securities, the company’s broker.

“I am pleased with our strong revenue performance in what continues to be a difficult and challenging time in the market,” said Alex Laffey, chief executive.

The company began as an agricultural business in 1940 and later became Stobart Limited in 1970, with the logistics arm spun off at the same time. Conflict over the continued use of the Stobart name, which was recently given a £50m price tag for exclusive rights, may lead to a rebranding.

Net debt was above consensus forecasts, rising from £109.5m to £159.7m in 2018. The logistics group acquired several brands through the year, including The Pallet Network, a rival haulier company, and iForce, a supply chain management company.

Pre-tax profit was marginally below expectations, at £49m, instead of £50m.