13th Jun 2018 10:59
LONDON (Alliance News) - Shares in logistics firm Connect Group PLC almost halved Wednesday as it lost its boss and finance head, after it said it expects to substantially cut its full-year dividend as it reduced profit forecasts following "extremely disappointing" trading so far this year.
Shares in Connect were 44% lower at 29.15 pence on Wednesday. Its price has fallen by 74% in the year to date.
Performance since interim results were issued at the start of May were described as "extremely disappointing". Consequently, Connect has "materially reduced" its pretax profit expectations for the year ending in August.
For the year ended August 2017, Connect reported pretax profit of GBP34.2 million on revenue of GBP1.59 billion.
The forecast reduction was after a "material" fall in volume and increased costs at the Tuffnells parcel delivery firm. Costs at Pass My Parcel also increased, and its Smiths News business has had "disappointing" sales of World Cup-related products. This was compounded by delays in achieving cost savings across the firm.
After reviewing the prospects of Pass My Parcel, Connect has decided to close the parcel collection business and wind down its network of local retailers. Connect plans to make provision in financial 2018 for the closure and onerous contract costs it expects to incur in financial 2019.
Connect expects its financial 2018 dividend to be "substantially reduced" on the prior year at a "minimum" after the lowered expectations. In financial 2017, it paid a 9.80 pence per share full year dividend. It had already announced a 3.10p interim dividend for financial 2018.
In response, Connect Chief Executive Officer Mark Cashmore announced he will resign from the company after a "orderly transition" with his replacement, and Chief Financial Officer David Bauernfeind has left the firm immediately.
Bauernfeind will be replaced by former finance head at delivery firm Yodel, Tony Grace.
Related Shares:
CNCT.L