THE owner of Eddie Stobart has warned on profits at its trucking division amid the pain being felt by some of its major retail customers.
Carlisle-based Stobart Group, which operates 2,250 trucks from 40 sites across the UK and Europe, said its chilled fleet was expected to record a loss in the six months to August 31 as sales volumes have been hit by shoppers tightening their purse strings and restructuring charges.
The group, whose trucks are a common sight on Britain’s motorways and have featured in a Channel 5 documentary series, is understood to have been impacted by weaker trading at its biggest customer Tesco, while other grocers and household goods firms are also under pressure.
Shares fell 3% yesterday after the group said full-year profits at the division would disappoint City hopes and its property division made slower progress than had been hoped.
But Stobart said long-term prospects for the group remain robust and it will benefit from a restructuring of its chilled fleet.
Investec analyst John Lawson said he was making hefty downgrades to his forecasts for the year to the end of February.
He now believes first-half pre-tax profits will fall 21% to £13m, while he reduced his full-year profits forecast by 24% to £36.5m, although this would still be up on last year’s £35.2m.
But he believes the group’s strategy to grow its air and biomass businesses could create value for shareholders over coming years.
The group, which handles distribution for blue-chips such as Coca-Cola, Mercedes and Unilever, was also hit by the economic malaise hitting overall high-street sales.
It has already made efficiency savings after restructuring its ambient fleet, closing a depot in Leeds and reducing headcount by around 282.
And it recently started resizing its chilled operation, which involves closing two of its sites and transferring operations to a new site in Lutterworth in Leicestershire, leading to significant savings in mileage, vehicles and staff.
Meanwhile, there was some good news for the group which also owns London Southend Airport. It saw around 250,000 passengers in its second quarter to the end of July after easyJet joined Aer Lingus in flying from the site in April.
The figures suggest it is on-track to attract one million passengers this year at the airport, and plans to significantly expand the size of the terminal.