DX Group is set to edge back into the black with new work and operational efficiencies helping efforts to turn the loss-making business around.

In a pre-close trading update for the year to 30 June 2019, the company said that its results “are expected to be in line with market forecasts, with DX moving back into profitability”.

The statement added that the company had generated £3.2m of earnings before interest, tax and depreciation (EBITDA), compared to an EBITDA loss of £4.9m in the previous year with turnover up by 8% to around £322.5m (2018: £299.5m).

It had previously told motortransport.co.uk that it was unlikely to make a pre-tax profit for the period, though.

Net debt at the year-end is also expected to be “significantly better than forecast" at approximately £1.3m, the company said.

This compares to £1.1m in the previous period and comes after a £3.3m capital investment in the business which it said “reflects improved working capital management”.

In a statement the company added that the capital investment included "new sites, [investment] in IT systems and improvement to operations and site infrastructure, including some sorting mechanisation. We plan further investment as well".

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The improvement in the company’s performance is down to both DX Freight and DX Express, the statement added.

DX Freight, which includes the group's irregular dimensions and weight and logistics activities, saw “significant improvements” in operational efficiency and customer service and had secured “healthy levels of new business".

DX Express, which includes DX Exchange, Secure and Courier services, “has further slowed the rate of attrition of the annuity revenue at the Document Exchange”, the company said. It added that its courier offering is growing, which it said “will help offset the impact of the non-renewal of the HMPO contract due to expire in January 2020”.

DX lost the contract to an unnamed rival earlier this year, following a retender in which it insisted it had bid on “commercially realistic terms”.

The contract will expire in January next year after a transition period. The timing of the contract's end is such that it will not affect the company’s results for the year ended 30 June 2019.

Speaking to motortransport.co.uk David Mulligan, chief financial officer at DX Group, said the "hard work is starting to pay off".

He added: "Our strategy is focused on building a broad base of customers.  At DX Freight, we’ve shifted the focus to B2B customers, away from B2C, because that’s more suited to the division’s fleet."

Liad Meidar, managing partner at Gatemore Capital Management, the company's largest shareholder, said: “Today’s trading update is a further sign that DX Group is heading in the right direction.

"We are pleased to see that the turnaround plan for the core business remains well on-track and are confident that management will continue to capitalise on this success and build DX into a freight and logistics powerhouse.”