Start up problems with a "restaurant chain" contract played a “significant” role in a 95% plunge in DHL Supply Chain’s profit last year.
According to the company’s latest annual results to 31 December 2018, pre-tax profit plummeted in the year to £3.9m – down from £79m the year before.
In its strategic report to the results DHL Supply Chain, which is owned by Deutsche Post, said that “the business experienced a number of one off items in 2018, including issues with the start-up of a new service to a restaurant chain that had a significant impact on profit for the year”.
DHL Supply Chain was stripped of some of its contract with KFC early last year after its failure to meet delivery deadlines forced the fast food retailer to temporarily close two thirds of its 900 stores. The ensuing frenzy made headlines around the world.
The contract was returned in full to previous incumbent Best Food
Logistics (BidVest Logistics) in April of this year.
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Despite the fall in profits in the period the company remained upbeat in its strategic report to the annual results. It states that “the underlying business performance is robust, with new business, transfers and renewals offsetting the effect of any lost business, resulting in underlying turnover growth of 4%”.
The rise in turnover to £3.3bn (2017: £3.2bn) was boosted by the company’s decision in the period to make DHL Supply Chain Limited the main trading entity for DHL Supply Chain’s business.
The report reveals that as part of this move a number of consumer and retail contracts were transferred to DHL Supply Chain upon renewal from fellow group entities Excel UK, Power Europe (Doncaster) and Bracknell-based Power Europe.
The report added that going forward customer contracts in fellow DHL Supply Chain companies will be renewed in DHL Supply Chain Limited.
Other subsidiaries in the group include DHL Supply Chain International, McGregor Cory, which provides warehousing and contract distribution services and DHL Services which provides all staffing to the group.
The recruitment firm provided a total of 40,556 staff to DHL Supply Chain Services and its subsidiaries in 2018, up from 39,767 in the previous year. Driver numbers fell in the period from 8,314 to 8,122.
Other future strategies include a programme to drive growth which will focus on key sectors, the report added.
Asked to comment on the results and identify the restaurant chain, a spokeswoman for DHL Supply Chain said: "I'm afraid we're unable to provide commentary on financials at country level, or discus individual customer contracts."
