Parcel freight drives Connect Group’s profit increase
Connect Group has reported an increase in profits, driven by growth in its parcel freight division. In its unaudited interim results for the six months ended 29 February, the Group reported adjusted revenues of £948.4m, up 4.2% on last year, and an adjusted profit before tax of £27.2m, which was up 13%.
Commenting on the results, Mark Cashmore, Group Chief Executive, said: “The Group has performed well in the first half, making pleasing progress with our strategic priorities.
“In particular, Parcel Freight has continued to deliver impressive revenue and profit growth, supported by the significant levels of new business secured in the period.
“The solid performance of the core News business is underpinned by resilient newspaper and magazine sales and Pass My Parcel is growing brand awareness following the launch of our new mobile enabled returns service with ASOS.”
Focusing on the various divisions, Connect Group said that its “core” news delivery business has been driven by “both resilient sales and the continued achievement of efficiency targets”. The Group added that its new agreement with Northern & Shell, the publisher of The Express and Daily Star newspapers and OK! Magazine, “further supports the future stability of the business”, with 94% of its contracts (at 2015 revenue values) now secured through to 2019.
The Group reported that Parcel Freight has “again outperformed the market” – with a revenue growth of 12% and profit growth of 8% – and “reinforced” the view that the division “will be a key driver of future growth for the Group”.
The interim results statement noted that investment in Parcel Freight to sustain the growth and increase capacity is ongoing.
“Two new depots have opened in the period and a further five sites will be relocated or extended in 2016, improving efficiency at those locations as well as easing pressure on the remaining network,” according to the statement.
“A rolling programme of upgrades covering the whole estate has also started, together with investment in fleet and further strengthening of the management team, following the appointment of Chris Ward as Managing Director of the division in June 2015.”
Connect Group also emphasised how it planned to capitalise on having the various divisions working together in a more integrated way: “Looking ahead we remain excited about the prospects for Tuffnells’ role in the wider Group. Our focus to date has been on integration together with ensuring that growth was maintained through a period of significant change.
“With a new team in place, we are now actively exploring Groupwide opportunities. As well as scoping the benefits of shared infrastructure, we are running trials to understand the potential for Smiths News to provide last mile distribution for Tuffnells, and for Tuffnells to support the growth of Pass My Parcel with deliveries and infrastructure that will expand our current reach.”