DX: we look forward to another year of continued progress
DX, a provider of delivery solutions including parcel freight, secure courier and logistics services, unveiled strong trading figures in its half year results announced today, and £4 million of further investment over the next six months as it completes a £10 million investment programme started in 2019.
Revenue increased by 7% in the 27 weeks to 2 January 2021 to £182.7m and the management team continues to take large steps forward in rebuilding the Group’s profit. An adjusted profit before tax of £3.8m at the interim stage replaces last year’s adjusted loss before tax of £1.7m, a £5.5m swing.
This significant improvement in performance was driven by very strong growth in the DX Freight division, which specialises in the delivery of irregular dimension and weight items. Revenue at the division rose by 19% to £103.4m, helping to drive an operating profit of £8.1m, a £9.5m improvement against the prior period, which generated a loss of £1.4m. The division achieved record service levels and added significant levels of new business, which contributed to improved productivity and operating margins.
Three new depots were opened in the first half at Westbury, Oxford and Burnley, and two further depots are planned to open in the second half of the year with major improvements scheduled for the division’s sites at Glasgow and Hoddesdon.
Results from DX Express, which specialises in secure package delivery and operates a Document Exchange service, were affected as expected by the cessation of the HMPO contract in the prior year and coronavirus restrictions. These impacted volumes, especially with non-essential retail customers, and the business mix was more skewed towards B2C deliveries than usual, reducing overall efficiency. Divisional revenue reduced by 5% to £79.3m while operating profit was £7.4m against £11.1m in the comparable period last year. Nonetheless, DX sees growth opportunities, and a programme of investment is in place. Two new depots are to be opened in the second half of the financial year, with six further depots planned over the next two years. A ‘Digital Document Exchange’ is also in development.
The Group’s £10m capital investment programme is on track for completion this year. Focused on improving IT systems, expanding and upgrading the Group’s networks and further sortation mechanisation at hubs and depots, a total of £2.7m was invested in the first half of the financial year, and almost £4m is to be invested over the second half.
Trading to date in the second half of the financial year is significantly ahead of the same period last year, in line with management expectations. The Board expects the business to continue to make strong progress over the remainder of this financial year, and views prospects further ahead with an increasing level of confidence.
Lloyd Dunn, CEO of DX, commented: “This is an excellent performance from the Group, despite the challenges created by the coronavirus pandemic for some areas of operations. Strong volume growth at DX Freight has been the principal driver of growth, offsetting the anticipated challenges at DX Express.
“Our focus is now on rebuilding profitability, having returned DX to profit in the last financial year. We will achieve this through continued volume and margin growth, driven by high service levels, and efficiency and productivity initiatives. Our £10m capital investment programme, now in its second year, will support our plans across both divisions.
“Trading in the second half is significantly ahead of the same period last year, in line with our expectations, and with anticipated levels of new business, as well as greater clarity over a return to
more normal levels of activity, we look forward to another year of continued progress. Looking further ahead, we view prospects with an increasingly level of confidence.”