30th Jul 2019 10:26
(Alliance News) - Xpediator PLC on Tuesday gave confident outlook for 2020 and beyond but said its profit will fell below market expectations in 2019 amid reduced sales volumes, increased costs, and heavy investments.
The stock was 37% lower in morning trade in London at 32.35 pence a share.
The AIM-listed freight management services provider said it expects its pretax profit to be "materially" below market forecasts, despite revenue growing to over GBP200 million. Xpediator delivered pretax profit of GBP5.6 million in 2018 on a revenue of GBP179.2 million.
As a result of a large customer recently giving notice in respect of its contract with Xpediator's UK logistics division to utilise the warehousing facilities at Braintree, south east England, the company said it has decided to take the opportunity to invest in the warehouse, so that it is suitable for higher-value fulfilment business rather than lower-margin storage. This re-configuring of the Braintree warehouse will entail a loss of business, Xpediator said, while the proposed investment is carried out over the next few months.
Meanwhile, EshopWeDrop, the company's e-commerce business, has generated lower volumes in the year-to-date, whilst continuing to invest in developing its franchise model in further geographies.
In addition, Xpediator said turnover in Regional Express is currently tracking below that achieved in 2018 which has impacted upon profitability this year.
Looking ahead, the company said the management of this division is focussing attention on securing two "valuable" and strategic contracts which are expected to generate a material and sustainable profit growth in 2020 and beyond.
Xpediator noted that some additional costs have been required to prepare for the consequences of a "no-deal Brexit" as it continued to work with customers to ensure a continuous service.
More positively, the company said its Anglia unit is performing strongly and the Romanian Pallex business and Affinity also are trading well.
"We are disappointed to be below our profit targets for this year, however, critically customer demand for our services remains strong reflected in our continued sales growth which, together with the investments we have made across the business, particularly into information technology makes us confident in the group's future growth prospects for 2020 and beyond," said Chief Executive Stephen Blyth.
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