DX Group has come out of the red to deliver pre-tax profit of £1.7m, aided by “very strong growth” in its freight division.

Reporting its half-year results, the group said revenue had increased by 7% in the 27 weeks to 2 January 2021 to £182.7m, with adjusted profit before tax rising to £3.8m - a £5.5m swing from last year's adjusted pre-tax loss of £1.7m.

DX Group said its recovery was driven by the performance of DX Freight, which specialises in the delivery of irregular dimension and weight items.

Revenue at the division rose by 19% to £103.4m, helping to drive an operating profit of £8.1m - a £9.5m improvement against the prior period, which generated a loss of £1.4m.

The group said its freight division achieved “record service levels” in the period and added “significant levels of new business”.

DX Freight also opened three new depots at Westbury, Oxford and Burnley in the period. Another two depots are set to open in the second half of the year, alongside major improvements scheduled for the division’s sites at Glasgow and Hoddesdon.

However DX Express is still feeling the fall-out from the loss of the Passport Office contract last year as well as suffering from reduced non-essential retail volumes due to Covid-19 restrictions.

The division, which specialises in secure package delivery and operates a document exchange service, saw revenue fall in the same period by 5% to £79.3m. Operating profit also fell to £7.4m compared to £11.1m in the same period last year.

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Despite the losses, DX Group remains upbeat about DX Express’ fortunes, predicting growth opportunities this year, supported by an investment programme.

The division will also see two new depots open in the second half of the financial year, with six further depots planned over the next two years. A digital document exchange is also in development, the group added.

Turning to its £10m capital investment programme, DX Group said a total of £2.7m was invested in the first half of the financial year, with almost £4m due to be invested in the second half.

The investment programme is focused on improving IT systems, expanding and upgrading the Group’s networks and delivering further sortation mechanisation at hubs and depots.

Looking ahead, DX Group said trading to date is significantly ahead of the same period last year, and predicted further “strong progress” for the year.

Lloyd Dunn, chief executive of DX, said: “This is an excellent performance from the group, despite the challenges created by the coronavirus pandemic for some areas of operations. Strong volume growth at DX Freight has been the principal driver of growth, offsetting the anticipated challenges at DX Express.

“Our focus is now on rebuilding profitability, having returned DX to profit in the last financial year. We will achieve this through continued volume and margin growth, driven by high service levels, and efficiency and productivity initiatives. Our £10m capital investment programme, now in its second year, will support our plans across both divisions.

“Trading in the second half is significantly ahead of the same period last year, in line with our expectations, and with anticipated levels of new business, as well as greater clarity over a return to more normal levels of activity, we look forward to another year of continued progress. Looking further ahead, we view prospects with an increasingly level of confidence.”