Kinaxia defies pandemic to deliver 66% boost in operating profit

Kinaxia is preparing to forge ahead in 2022 after weathering the worst of the pandemic and Brexit to deliver a 66% rise in operating profit, chief executive Simon Hobbs told MT this week.

Looking back over the course of Covid, Hobbs said: “I would like to think we are through the worst. Volumes are back up, labour shortages have improved and we expect we will get them completely sorted by the third quarter this year, ahead of the peak season.

“Whilst there are still inflationary pressures, we have dealt with the commercial pressures and also learnt to live with Covid-19 outbreaks with our contingency plans in place, so I believe 2022 will see a return to something more like normality,” he added.

Hobbs spoke following the publication of the company’s latest annual results to 31 December 2020, which show a 5% rise in group revenue to £171m (2019: £170m) with pre-tax profit surging to £1.6m, up from a loss of £1.8m in the previous year. Operating profit leapt 66% in the period to £11.3m, up from £6.8m in 2019.

Kinaxia, which runs a fleet of 882 vehicles and 1176 trailers, employs around 1,780 staff and operates 2.6 million sq ft of warehousing.

Since its launch in 2012, the group has acquired 13 companies including Bay Freight, William Kirk, NC Cammack & Sons, Foulger Transport, Lambert Brothers Haulage, Panic Transport (Contracts), AJ Maiden & Son, Mark Thompson Transport and BC Transport 2017.

In October 2018 it bought Manchester logistics firm AKW and a month later purchased Gateshead-based Fresh Freight. Its latest acquisition was Bristol haulier David Hathaway Transport, which it bought in May 2019.

Hobbs said he was proud of how the group of 13 family firms has coped with the twin challenges of the pandemic and Brexit.

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“The team did really well and showed the strength of Kinaxia and how our family-led firms were able to react quickly to the challenges. But it was tough. Our volumes fell 35% in April 2020,” said Hobbs, who had joined Kinaxia just seven weeks before the first pandemic lockdown. “It was quite an induction,” he recalls, adding: “But we cut our cloth accordingly to meet the new demands and our customers were great and kept paying us which was important and so we exited the year pretty strongly, in better form than at the end of 2019.”

Hobbs added that despite lockdown restrictions in 2020 the group achieved the successful implementation of a new warehousing system in Trafford Park, which due to Covid-19 required all training to be done online, and the relocation of subsidiary Mark Thompson Transport to a new fit-for-purpose facility in Appleton in Warrington.

Looking back on 2021 Hobbs said it had been equally challenging. “It went from famine to feast but without enough resources to meet demand,” he explained.

“Like all companies we didn’t have the same level of government support, we had lockdown in the first quarter of 2021, inflationary pressures, the impact of Brexit and driver shortages in the face of rising volumes as demand returned. In April 2021 on certain occasions we had 7% of our fleet parked up. We had the work but we did not have the drivers.

As a result Kinaxia launched its own driver’s academy in October last year, and is currently processing 200 applicants.

“The issue now isn’t about training them so much as getting their medicals and licences but our driver shortage has halved from back in April and will take to mid-year to resolve so we will be able to go into the peak period fully resourced,” Hobbs continued.

Asked if the company has plans to acquire any more companies in 2022, he said: “The last 18 months has been about battening down the hatches, focusing on what we have. It has been more about capturing internal synergies, such as our internal pallet network K-Link, standardising the transport management system and continuing our warehouse roll out programme.

“Since February 2020 to the end of 2021 we have increased our warehouse footprint from two million sq ft to 2.6 million sq ft and we will keep on growing that and that will feed our transport division. However if the right acquisition opportunity comes along we would consider it,” he added.

Looking to the future, as the company prepares to celebrate its 10th anniversary, Hobbs said: “We want to be one of the top ten UK logistics players and we are confident we can achieve that.”