Clipper Logistics’ latest annual pre-tax profits took a hit after it agreed – following lengthy debates with its auditors - that a series of contracts signed at the end of the financial year should be included in the following year’s accounts.
Tough trading conditions in the commercial vehicle market “exacerbated” by IVECO’s trading strategy also hit Clipper Logistics’ commercial vehicle division, resulting in a 20% revenue drop.
Reporting its latest annual results to April 30 2019, the group said the decision to put back a “series of contracts” with one customer was “debated at length” during the audit process.
It added that “on balance” they decided they should be recognised in the year ending 30 April 2020.
Clipper saw a 6.1% fall in pre-tax profit to £13.4m (2018: £14.3m), despite a 15% rise in revenue to £460.2m (2018: £400.1m).
Performance in the group’s three divisions varied in the period, the group said.
Its commercial vehicle division Northern Commercials (Mirfield) saw revenue fall 20.3% to £83m in the period, down from £104m in the previous year.
The division, which operates a number of IVECO and FIAT commercial vehicle dealerships, was hit by the impact of Brexit; a fall in new vehicle registrations; “concerns” about clean air zones; and “IVECO’s UK strategy”.
The group criticised the Italian truck maker’s focus “on margin preservation for IVECO rather than growing sales” which it claimed had left its dealers unable compete on price.
"As a result, our commercial vehicles segment has been unable to be competitive when pitching against other marques and, as a result, sales
have declined significantly," said the annual report. "We expect to see a strategic shift from IVECO UK in the coming months following the May 2019 appointment of a new business director for UK and Ireland."
Strong performance
In contrast Clipper’s e-fulfilment and returns management division put in a “very strong” performance, delivering a 46.8% rise in revenue to £234m (2018: £145m).
In the same period the group’s non e-fulfilment logistics division defied the “widely reported difficulties on the high street” to deliver a revenue rise of 4.4% to £145m (2018: £139m).
The group said it had seen “significant growth in activity” with customers including ASDA, Browns, Morrison’s, Halfords, New Look, Wilko and ASOS.
It also won new deals with existing customers including boohoo.com subsidiary PrettyLittleThing, Ginger Ray, Levi Strauss, Vestel, Tech Data and Sports Direct in the UK, and Mountain Warehouse in Poland.
It added that whilst some of its high street retail customers had been through “high profile financial distress” in the period the group had been protected from any “adverse” impact by “robust contractual protections”.
Looking forward the group said it had commenced new deals with Shop Direct and Simba Sleep, secured a contract with Amara Living and is due to start Morrison’s Nutmeg online operation “imminently”.
However the group revealed it had lost contracts with Whistles and Go Outdoors due to its strategy to combine services into other operations.
The group said it would not renew a “major” contract in March 2020, adding “the effect of this will be immediately earnings-enhancing.”
Commenting on the results chairman Steve Parkin said Clipper Logistics was confident that it could continue its current momentum due to its investment in “quality people” and its ability to identify “key trends and developments”.
