Economic pressures take their toll on CM Downton

A harsh economic climate, growing costs and rising customer resistance to rates increases all left Gloucestershire-based haulier CM Downton struggling to raise its profit level significantly, despite a 13.8% increase in turnover in the year to the end of June 2012.

Group turnover excluding joint ventures rose from £78.3m to £89.1m during the year, while pre-tax profit rose just 3.6%, from £6.1m to £6.3m.

The firm, which was named Haulier of the Year at the Motor Transport Awards 2012 for its outstanding financial performance since the credit crunch began in 2008, still managed a 7% profit on group turnover during the year, however.

Downton director and company secretary Graeme Blackwell told Motortransport.co.uk that the rise in turnover was mainly attributable to new business, including the two-year contract it started work on in October 2011 for brewer InBev, on which it is now in the process of negotiating an extension.

The year to the end of June 2012 was “genuinely tough”, said Blackwell. “Customers are expecting prices to be reduced, not increased, but the reality is that we have 2% inflation on the majority of our costs so we have to hold out for something,” he said.

Customers have also been extremely resistant to rises based on fuel escalators, he added. “Fuel is becoming a bigger element of our operating costs, but it’s very difficult for customers to take that on board,” he said.

Downton, which runs around 450 trucks and 1,100 trailers, hopes to raise group turnover to around £100m in the current financial year, said Blackwell. The state of the economy, fuel costs and competition all remain major headaches, he admitted, but on fuel costs, the firm is hoping to see at least a 5% saving after rolling out a new Microlise telematics system – a process that has already been completed at two depots and will be carried out at the rest over the summer.

The firm has also invested in a proper business development team this year, which Blackwell said had begun to produce far more leads. “We’re quite enthused by this and hope it will give us the results in the next financial year,” he said. “ We don’t want to sit still – our objective is to grow the business.”