DX Group has taken another significant step on the road to its rehabilitation, its CFO David Mulligan told motortransport.co.uk today (5 March).

Mulligan was speaking after the publication of the embattled group’s interim results for the period ended 31 December 2018, which revealed turnover growth and a smaller loss.

“It was around a year ago that we were outlining our turnaround plan. We made structural changes at the back end of last year,” said Mulligan.

He explained that empowerment of general and regional managers had helped the group’s respective businesses regain their identity and boost service levels.

Dedicated sales teams for DX Freight and DX Express has delivered top-line growth too, he added.

As a result DX Group, which traditionally has a stronger second half in regards trading, expects to be back in profit at an EBITDA level for the full year’s trading, although it will likely still record a loss on a pre-tax basis.

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Key to the new management team’s approach is the ditching of the OneDX approach of the predecessors that has placed “the depots and service centres at the heart of DX” again, moving away from a failed centralisation of resources and networks.

Group turnover was up 7% to £157m (2017: £146.6m) while the EBITDA loss was 43% smaller year on year at £2.5m (2017: loss of £4.4m).

DX Group made a pre-tax loss of £5.3m in the period (2017: loss of £14.1m).

There were no exceptional costs in the period and following a refinancing exercise last year, net debt was £3.5m in the period compared with £25.6m a year ago.

DX Freight

The old Nightfreight business, DX Freight remained loss making. While turnover increased by 16% year on year to £78m (67.4m), the division made an EBITDA loss of £5.5m (2017: loss of £8.1m).

DX Freight contains the groups DX Logistics business, which delivers bespoke services to the likes of IKEA and Avon, as well as its two-man operation.

However, the largest contributor in regards turnover is its one-man operation, which added £5m in revenue to reach £47.8m.

Although dedicated sales support it paying dividends, Mulligan said a decision to reduce its B2C dependency - it has almost halved compared to a year ago - and concentrate on “the heart of what we do, which is B2B on our 7.5-tonne fleet going from trading estate to trading estate” was paying off.

DX Group has also opened new, dedicated sites for its divisions including one in Pucklechurch, Gloucester for DX Freight. This will be joined, imminently, by a new DX Freight depot in Maidstone, Kent.

“It’s helping build out local presence and deliver a better level of service,” he said.

DX Express

While the division’s turnover was flat at £79m (2017: £79.2m) its EBITDA fell 18% to £11.6m (2017: £14.2m).

DX Exchange remains under pressure as fewer physical documents are moved but the rate of attrition has been slowed to 8% compared with 12% a year ago.

The operator’s play in the area is to reposition DX Exchange as an exclusive members’ network, something that Mulligan said it is taking its time with and therefore has a completion rate of 12 to 24 months.

DX Courier increased turnover by 9% to £30.1m in the period.

April is a big month for the division, as it will find out if it has triumphed in the tender for the Passport Office. Its current contract runs until October 2019 but it has delivered the service for the client since 2004.

DX Group said it will also be adding a mix of 7.5-tonner MANs in the next few months, which will be a mix of replacements and additions to the fleet.

Gatemore

Liad Meidar, chief investment officer at Gatemore Capital Management, which with a holding of more than 35% is DX Group's largest single shareholder, said: “We are pleased by today’s results, which are a further sign that DX Group is heading in the right direction.

"We remain confident in management’s ability to implement its plan to deliver long term growth, and look forward to continuing to work with the team.”

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