Employment costs hit Meachers Global Logistics' profit last year but the Southampton-based company has deeper concerns about Brexit, according to its chairman.
For the year ending 31 May 2018, the logistics business, which is celebrating 60 years in business this year, reported turnover of £26.2m (2017: £26.1m).
Pre-tax profit was down 4.5% to £1.9m (2017: £2m).
However, chairman Bob Terris said he was happy with results given the pressure on employment costs and the fact that Meachers’ profit margin remained above the industry average.
He said: “There’s been a large increase in costs this year compared to previous years. To retain drivers and skills we have had recruitment costs and also we rely on agencies. We have a number of contracts where we have huge peaks: the World Cup and pre-Christmas, for example.
“The World Cup was also in a holiday period, so people were on holiday as well. Rental costs have increased too.”
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Terris added that the company’s immediate concern was Brexit. “There’s a tremendous amount of uncertainty among customers and people in the industry,” he said.
“Nobody knows what’s going to happen. Over 90% of our customers are foreign owned.”
He said one effect of the uncertainty was the increasing difficulty of buying vehicles. “Nobody is building anything for stock any more. We are ordering trucks and trailers now for next March.
“I think manufacturers are cutting back and only building for orders, although it has been like that for a little while, to be fair,” he said.
His comments followed an announcement by BMW last month that it would shut down its Oxford factory at the end of March 2019 to minimise disruption in the event of a no-deal Brexit. Jaguar Land Rover has also warned of the potential knock-on effects.
Terris warned: “What happens in the car industry will be a barometer for the rest of industry; the ease of shipping things across [the Channel].”
