Tuffnells’ demise sees DX Group reap £35m boost

DX Group’s takeover of 15 former Tuffnells Parcels Express depots and additional volumes from former Tuffnells customers, following its demise last month, has added an estimated £35m of value to the business.

In its trading update for the second half of its financial year, to 1 July 2023, DX said the benefits brought by taking over the Tuffnells depots and some of its customers’ volumes is a “major development”.

It added that the process of absorbing the Tuffnells depots is now under way and the depot network will be “further optimised” over the next 18 months.

Overall DX Group performed well over the period, with trading in line with management’s expectations, the update said.

Revenue for the financial year is expected to be approximately 10% ahead of the prior year at £470m (2022: £428m), with the group continuing to generate strong cash flows. Net cash at 1 July 2023 was up by 39% to £37.6m (2022: £27m), which the update said is “slightly ahead” of the management’s target.

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This follows a capital expenditure over the financial year of £10.9m (2022: £6.2m) and the payment of an interim dividend of £3m (2022: nil), the updated noted.

Both DX Freight and DX Express contributed increased revenue and achieved margin gains in the period, which, the update said, sees DX remain on track to attain its targeted operating margin of 7.5%-10.0% within the next two years (2022: 5.8%).

A key focus over the second half of the year has been on the group’s network, which has been expanded and reshaped, “particularly in the important regions of the North-West and South-East”, the trading update revealed.

In addition, DX has continued to invest in its fleet, including electric vehicles, and in equipment and technology, in line with its capital allocation policy.

The trading update concluded: “Despite the current economic headwinds, the board remains encouraged about growth prospects for the group, and the recent additional volumes secured should enhance profitability in the new financial year and beyond. As ever, consistent high customer service levels remain integral to the group’s continued success.”

DX Group will provide its next trading update when it announces its full year results, expected in early October 2023.