Motor Transport 2 September 2019

Page 1

Sharp ■ Informed ■ Challenging

2.9.19

NEWS INSIDE Harsh words

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TC lambasts Aspray owners over financial standing p3

Port delays

No-deal Brexit could bring delays at ports, warns DPD p4

Hydogen heavies

They may be the future, but they’re still a long way off p6

OPERATORS INSIDE Aspray Tranport ............................................ p3 Bibby Distribution ........................................p34 Boels Rental ................................................. p4 CM Downton ................................................p18 Certas Energy ..............................................p38 DPDgroup ..................................................... p4 Hermes Europe ............................................p42 Maritime Transport ......................................p16

Clients and 3PLs report disparity A fifth of UK companies have reported an unsuccessful start to contracts with their 3PLs, according to research from supply chain and logistics consultancy SCALA. The research looked at contract start-ups and found that 15% of customers have experienced a service that was below expectation in terms of cost, deliverables or timing issues. Meanwhile, 5% said the relationship was poor and they experienced major problems. SCALA surveyed a selection of the UK’s best-known businesses and 3PLs (whose revenue runs into billions and whose number of clients run into thousands) to ascertain companies’ satisfaction rates and areas of concern regarding the performance of their 3PLs. 3PLs showed an overly optimistic view of their performance, with 54% rating their contract start-ups as highly successful – on time, to budget and no service disruption – compared with 35% of customers with the same opinion.

Operator warns first-half profit will be significantly lower than forecast

Investor unrest as debt rises at Eddie Stobart By Tim Wallace

Eddie Stobart Logistics (ESL) may be forced to seek a new injection of capital to ease investor concerns over mounting debts, an equity analyst has told MT. The company shocked investors last month when it suspended trading in shares and announced CEO Alex Laffey was to step down. It has since also been revealed that ESL made it difficult for auditor KPMG to obtain “sufficient audit evidence” as it compiled the company’s annual accounts. This led the accountancy firm to resign as its auditor last November, triggering an investigation by ESL chief financial officer Anoop King that exposed a £2m hole in the accounts. Dario Carradori, an analyst at Edison Investment Research, said ESL’s woes could now see “some form of fund raising” become inevitable as it looks to reassure investors.

Investors will also be concerned with the financial structure of the company. The leverage [level of debt] of the company was higher than the target at the end of 2018. Carradori said: “ESL said EBIT is going to be significantly lower than expected, but we don’t know by how much. Depending on how much lower it is, the leverage will change. Leverage is usually calculated as net debt divided by earnings. ESL said the earnings will be lower in the first half of the year so the debt ratio will be higher and a key focus for investors.” Asked how the situation might play out, Carradori said ESL would have to give feedback to investors on its accounting revision and ensure they are happy with the review. “They have to ensure this is it and that there will be no more revisions,” he said. “And they have to understand whether the financial structure requires adjustments or if other actions are needed.

“There are various things a company can do when debt is excessive. They can either try to reduce it with cash-flow generation, or a company with an excessive leverage will require a capital increase. The implications for ESL will depend on the announcement in September.”

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GOOD CUT: The haulage industry gave a warm welcome last week to reports that prime minister Boris Johnson is planning to cut fuel duty for the first time in nine years. The cut, which could be as much as 2ppl, is part of an emergency budget planned for 4 September, according to the Sunday Times. Fuel duty has been frozen at 57.95ppl since 2010 and is estimated to bring the Treasury £9bn a year. FTA policy director Christopher Snelling said: “A cut would stimulate the UK economy while mostly paying for itself as the government would get more tax from other sources. Fuel duty is a blunt tax that does little for environmental purposes, as there is no alternative to diesel in the mass market.” Howard Cox, founder of campaign group FairFuelUK, said the cut would reduce inflation, prices in the shop, increase tax revenue and support hard-pressed hauliers during the Brexit upheaval.


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