DX half-year profits set to “outperform” market expectations as restructuring continues to drive growth

DX’s restructuring is continuing to bear fruit with profits at the parcel freight firm set to exceed market expectations, according to its latest trading update.

The company said that in its first half year to 2 January 2021, trading was ahead of the same period last year.

DX Group operates DX Freight, which specialises in the B2B and B2C delivery of items of irregular dimensions and weight and DX Express which specialises in time sensitive and high value items.

The trading update said that despite a “modest” impact on B2B volumes since December, which it attributed to the current lockdown, trading remains “encouraging”.

As a result the company said it “anticipates that DX will materially exceed current market expectations for adjusted profit before tax for the financial year.

“The outperformance reflects continuing strong progress at DX Freight, where both volumes and margins have improved over the same period last year.”

The trading update added: “Volumes at DX Express were slightly better than management expected but margins have softened. This was due to the business mix, with a greater proportion of B2C deliveries as B2B volumes were impacted by the coronavirus restrictions.

“Net new business across both divisions remains encouraging and the new business pipeline is very healthy.”

The group is also extending its delivery network following the recent opening of three new DX Freight depots at Burnley, Westbury and Oxford.

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It plans to open a further three sites over the second half of the financial year, which it said were well under way and reflect “management confidence and new business opportunities”.

It added: “The Group’s financial position remains strong, with high levels of liquidity and significant headroom within DX’s invoice discounting facility.”

The board will report the group’s interim results in early March 2021.

The trading update closely follows the publication of DX Group’s latest annual results to 27 June 2020 published last month, which revealed a return to profit for the group, with pre-tax profit up to £8m, from a loss of £0.2m the previous year.

The group said the rise reflected strong growth at DX Freight, with revenues rising by £10.4m to £169m in the period, driven by the expansion of DX Freight’s 1-Man service “albiet held back by the impact of the Coronavirus”.

The service saw volumes rise by 14% in the period.

However revenue at DX Express fell to £160.3m (2019: £163.9m) in the period hit by the loss of the Passport Office contract and by the impact of Covid-19 which hit DX Exchange, the division’s specialist document exchange service.

DX Group instigated a major restructuring in 2018 after the company reported losses of £10.9m.

The restructuring saw responsibility and accountability devolved to regional directors and general managers and an injection of £3.5m into the freight division, targeted at the fleet and into site infrastructure improvements, including basic mechanisation, technology and network expansion.