Lenham Storage sees turnover and profit climb despite leap in cost of sales

Lenham Storage saw both turnover and profit increase last year, despite a jump in the cost of sales.

The group’s latest accounts, incorporating its subsidiary Lenham Storage (Southern), reveal turnover in the year to 31 August 2016 increased 9.5% to £46.2m (2015: £42.2m).

The firm’s pre-tax profit increased by 11.7% to £1.2m (2015: £1.0m) in the period despite driver shortages – consistent with its experience last year - and the introduction of the living wage in the year sending cost of sales to more than 9% higher.

In the directors’ notes to its annual accounts, Lenham Storage said that despite negotiating increases in some key rates in the year, conditions remained “difficult and challenging” with the company continuing to struggle with the recruitment of Class 1 and Class 2 drivers, leading to the increased use of agency drivers to meet the demands of rising turnover.

The company said the key factors behind the cost of sales rise were agency driver costs, the introduction of the living wage and changes in warehouse shift patterns.

The relative stability of fuel prices had mitigated other cost increases in the year, the company reported, adding that it is also “reducing costs where it can and amending its operational overheads to reflect market condition”.

Steve Hall, commercial manager at Lenham, said "steady growth continued, albeit within the constraints affecting everyone in our industry.  As ever, we have to ensure that all services produce a margin, and so a watchful eye has to be kept on cost increases beyond our control”.

However driver recruitment and the effect of Brexit will continue to challenge the company in 2017, the report added.