Laser Transport International suffered a "savage" financial hit due to the devaluation of the pound in 2016 after the UK's vote to leave the EU, newly published accounts show.
In its results for the year to 31 December 2016, the Hythe-based international freight company and former MT Haulier of the Year said the fall in the value of sterling after the EU referendum vote last June had created an “immediate and savage impact” on operating costs that “cannot be overstated”.
Chairman John Smith told MT that the vote and subsequent reaction from the money markets saw the company - which makes 63% of its turnover from European work and buys in the required groupage services from European partners in euros - say goodbye to £70,000 of operating profit virtually overnight.
"All due to circumstances out of our control," said Smith, who added that Laser's underlying business performance had remained encouragingly robust.
Smith added that a decision to switch from Palletways to Palletline in 2015 had worked very well for the haulier, with the UK contributing around 22% of Laser's overall annual turnover and most of this being pallet work. The remaining 15% of annual turnover comes from overseas work beyond the Europe.
The directors' report said that since February there had been “a solid improvement all round”, with turnover to September 2017 up by 6.7% and a number of divisions, including the firm’s UK exports division, performing “quite strongly”.
“We can only hope that the pound will slowly strengthen from now on", the directors added.
To mitigate some of the currency volatility, Laser will, according to its directors' report, focus on targeting higher margin business “within the wider and, to some extent, shorter haul European markets”.
It will also continue to develop its overseas and project forwarding activity from all of its UK terminals.
Cost of Brexit
- In its strategic report Laser Transport International said that, despite turnover increasing by 2.8% to £16.8m (2015: £16.4m) in the year, “the immediate weakening of sterling against the euro” after the leave vote, resulted in the cost of sales in the period rising by 3.6% to £16m (2015: £15.4m).
- The company calculated that the fall in the average exchange rate, from 1.280 to 1.161, meant that rather than achieving an operating profit of £173,644 in 2016 it made £104,578 instead (2015: £178,763).
- Laser Transport's pre-tax profit was £45,754 (2015: £108,697) in 2016.
