Downturn in logistics hits Tibbett & Britten
The sale of its automotive distribution business and a downturn in UK logistics pushed Tibbett & Britten into the red last year.
The logistics group, which issued a profit warning in December, reported a pre-tax loss of GBP6.1m ($8.7) in the year to December 31, compared with a profit of GBP33.4m in the year earlier. The deficit was struck after a net exceptional charge of GBP29.5m.
Profits in the UK were held back by the withdrawal of C&A from UK retailing.
Mike Arrowsmith, chief executive, estimated that this accounted for 2-3 percentage points of the 6 per cent fall in turnover experienced in this business.
The UK business was also affected by problems at a new warehouse for Mothercare, which led to stock availability problems for the baby group retailer and prompted it to issue three profit warnings.
Mr Arrowsmith said agreement had now been reached with Mothercare. He declined to reveal the cost incurred by Tibbett, but said it was “not material”, and the five-year contract remained in place.
Profit before goodwill amortisation and exceptional items fell 2 per cent to GBP33.8m, while turnover fell from GBP1.51bn to GBP1.47bn.
Tibbett also said it had begun work on a project for the Canadian Department of National Defence, which could lead to a seven-year logistics contract worth GBP100m a year, with the possible extension for four years.
The company also disclosed potential liability on its main pension fund scheme in the UK under the new FRS 17 accounting requirements of GBP33.6m.
A final dividend of 16.8p (16.3p) makes a total 24.4p (23.2p). The loss per share was 33.6p, (44.7p profits). The shares rose 22lp to 730p.
Comment
Tibbett’s concentration on the defensive food and grocery sectors and a high proportion of open book contracts – which allow costs to be passed on to customers – should have put it in good stead during the economic slowdown. But it has found other things to trip it up. Analysts forecast profit before goodwill amortisation and exceptional items this year of just over GBP40m, or 50.8p-55.5p per share.
This puts the shares on a forward p/e of 13-14 times The premium to Christian Salvesen is justified. But with less to gain from an upturn than more economically sensitive rivals, and credibility shaken by the problems at Mothercare, reaching Exel’s almost 19 times looks unlikely.
Copyright Financial Times Group
