DX Group has issued a profit warning due to continuing challenges in the courier market and margin pressure within its freight business.

In a trading update the operator said the tough trading conditions referred to in its update from 22 November 2016 had continued, including pressure on pricing.

“While there has been strong momentum and wins in the Logistics business, the expected growth in higher margin revenue from our DX Courier and freight activities has not come through, impacting profitability due to the fixed cost nature of this network,” it said in a statement.

Its plan to integrate five sites into one has also thrown up some “short term operational issues” the company said. These have resulted in higher costs in the interim.

“In the light of these issues, the board has reviewed its expectations of the group's performance and while material new contracts are now being implemented and the company's pipeline of new business opportunities is robust, it now anticipates that profits for the year will be significantly below current market forecasts, with net debt consequently higher than expected,” DX said.

The operator has also said it will not pay shareholders a dividend for some time to come.

Last November DX Group won a £25m Home Office deal. It came after a tough previous trading year.

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