Rhys Davies and Sons’ decision to ditch its unprofitable accounts last year has been vindicated, the Cardiff-based logistics and warehousing company said in its latest annual results.

Reporting for the year to 31 August 2016, the firm, which trades as Rhys Davies Logistics, said that while turnover fell by more than 10% to £37.5m (2015: £41.7m). Pre-tax profit rose in the same period by more than 8% to £405,453 (2015: £374,567).

Rhys Davies finance director Stephen Thomas said: “This performance is, in our view, a vindication of some difficult decisions we made last year with regard to exiting unprofitable contracts.

"At a time when the industry’s supply chain costs are increasing, it makes little sense engaging valuable human resource in activities that do not bring satisfactory levels of return.”

Thomas said the profits hike was tempered by the company’s failure to deliver an expected gross profit of £5.6m in the year, which he attributed to the ongoing driver shortage and the effect of Brexit.

Thomas said the EU referendum result had created uncertainty particularly in industrial sectors, hitting the company’s Q4 trading performance by creating “lower than seasonal average activity”.

He added: “In summary, we are pleased with elements of the financial performance achieved in 2016 but are disappointed not to have achieved more. We successfully managed a transitional period in which we focused on more profitable accounts however external factors weighed against our expectations of what we consider to more reasonable and fair return.”

Looking to the future the firm said its key concerns are the continuing lack of market confidence post-Brexit, possible trade tariffs, the falling value of the pound and changes to immigration rates that could exacerbate the skills shortage.

Rhys Davies and Sons operates a fleet of 270 vehicles and 302 trailers across nine depots and 560,000ft² of warehousing. It has contracts in the building products, chemicals, paints, carpets, food and drink, paper and waste sectors.

The company was unavailable for comment.