1st May 2018 13:08
LONDON (Alliance News) - UK specialist distributor Connect Group PLC said Tuesday profit fell 42% in the first half of its financial year, as its Tuffnells arm swung to an operating loss.
Earlier on Tuesday, Connect Group announced that Chief Financial Officer David Bauernfeind will step down from its position to pursue new opportunities.
Connect Group shares were trading down 5.2% at 56.90 pence.
Connect reported GBP9.5 million in pretax profit for the six months that ended February 28, down from GBP16.5 million a year before. Revenue was down 3.4% to GBP766.5 million from GBP793.3 million previously.
The group's poor results mainly resulted from a weak performance by its distributor of irregular freight, Tuffnells, which swung to an adjusted operating loss of GBP0.2 million from a profit GBP4.3 million a year before. While external revenue rose slightly to GBP87.3 million from GBP86.6 million, Connect said Tuffnells faced "a number of cost challenges" during the half year, including difficulty in filing driver vacancies.
In addition, volume growth at Connect's Pass My Parcel arm, a click-and-collect service for the delivery of online purchases, did not narrow the unit's operating losses by as much as expected. Pass My Parcel revenue more than tripled to GBP3.4 million but the business still recorded an adjusted loss of GBP3.5 million.
"In a period of challenging trading, our profit was impacted by a combination of cost and margin pressures compounded by the extent of change across the group," Chief Executive Officer Mark Cashmore said.
For the second half of the year, the group said its priority is to improve Tuffnells's performance and to minimize losses through a re-engineering of the click-and-collect process of Pass My Parcel.
"The priorities for the second half are clear with action underway to improve the performance of Tuffnells and re-engineer our click & collect proposition," Cashmore added.
Connect held its interim dividend unchanged at 3.1 pence.
Despite the significant losses, Connect Group net debt was reduced by 44%, from GBP149.9 million in 2017 to GBP83.6 million.
Related Shares:
CNCT.L