Shares in freight management firm Xpediator (XPD:AIM) rose as much as 11% in early trading to 63p after the company reported solid results for 2020 and said activity in the first quarter of 2021 had exceeded management expectations.
Turnover rose 3.7% last year to £221.3 million although that performance belies a pandemic-affected first half followed by a stronger than expected pick-up in the second half including a fourth quarter which was ‘significantly ahead of budget’.
MIXED PERFORMANCE
The freight forwarding division, which largely trades under the Delamode brand, posted revenues of £171 million, an increase of 7.1%, thanks in the most part to organic growth in the Balkans and Baltics. Profits at the division doubled to £6.8 million thanks to strong performances in Lithuania and Bulgaria as online demand surged.
Revenues and earnings at the warehousing and logistics division were slightly lower at £44.5 million and £2.6 million as progress in Romania was offset by ‘challenges’ in the UK, including the loss of a ‘significant’ client at its Braintree warehouse and its subsequent reconfiguration.
The transport division, which provides fuel and toll cards, was held back last year by the pandemic as customers made fewer vehicle journeys and fuel prices fell, but the Balkans remained strong.
On a positive note, strength in the fourth quarter has continued into the first quarter with trading across the group ahead of management targets, despite more complicated trading arrangements post-Brexit.
EXPANSION PLANS
New chief executive Robert Ross, who was formerly finance director and knows the business intimately, set out his vision for the firm alongside the results with an emphasis on growing sales and margins.
Growth is likely to be driven by ‘targeted, earnings-enhancing acquisitions’ says Ross. ‘Operating in a large, fragmented market means there are numerous acquisition targets and our strategy is to focus on global freight forwarders and contract logistics providers which are supported by a strong client base with a strong earnings track record.’
Meanwhile margins can be enhanced by ‘simplifying the business, investing in IT and driving out complexity’. Digitising the booking and tracking service, for example, should not only deliver a better customer experience but has the potential to drive margins up.
Analysts at broker Cenkos are penciling in revenues of £236 million this year, an increase of around 7%, and adjusted pre-tax earnings of £8.5 million, an increase of 18%, to reflect ‘continued growth in the business’ and an improvement in margins. By 11am the shares had settled at around 59p.
