DX Group has said that the shortage of skilled HGV drivers continues to affect its profitability as it continues to address its performance following a profit warning in November.

Speaking to Motortransport.co.uk chief financial officer Ian Pain said that the shortage had been so acute that DX had had to leave 7.5-tonne vehicles parked up and “cover them with Sprinters, which adds cost to the business”.

The operator has focused its efforts on a ‘warehouse to wheels’ scheme to develop new drivers from in-house staff, rather than looking to source drivers from overseas.

For the six months ending 31 December 2015 turnover fell to £141.6m, compared to £147.4m in the same period a year ago. Pre-tax profit also fell to £2.4m (2014: £10.7m).

However this does not account for a one-off goodwill impairment of £88.4m relating to its previous ownership, which led to a pre-tax loss of £88m. Pain said the business would make a trading profit in the second half of the year.

The like-for-like comparison suffers as DX Group exited low margin contracts, and is yet to include the subsequently won £12m of new business on its balance sheet, Pain said.

He explained that the business had been in transition, winding-down low-margin contracts inherited as a result of its acquisition of Nightfreight back in 2012.

He also revealed that DX had backed out of a logistics contract renewal with B&Q that was re-tendered in summer 2015, which he described as “very low margin” and that DX had commenced a new contract with Ikea in October 2015.

“There are obviously competitors out there who are more aggressive on price than others,” he said. “We maintain very good margins and we do try and differentiate ourselves by focusing on service. Our service is second to none."

Pain also said that its DX Exchange service, which specialises in the transfer of sensitive documents and has a majority customer set in the legal market, had also suffered as a result of changes by the government to legal aid reducing the number of legal practices.

New Hub

Planning permission for DX’s new central hub in Staffordshire, just off junction 10A of the M6, is expected in May. DX will enter the new site on a 25 year lease at £2.1m a year with no additional borrowings. The site development has been subject to protest by residents of a nearby village, but Pain said that DX was “very confident” that planning permission would go through to utalise the brownfield site.

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