A rise in firms tendering contracts more frequently and the loss of a large and "challenging" customer is presenting Gregory Distribution (Holdings) with both difficulties and opportunities.
Reporting its results to 1 October 2016, the company, which has 32 depots across the UK, said the trend was presenting the firm with additional risk but also creating “more opportunities”.
The directors’ report revealed Gregory Distribution had lost a large customer towards the end of the financial year. While the loss would result in “slightly lower” revenues in 2017, the company said it expected to maintain profitability and improve margins since “a large proportion of this business has been replaced by additional volume from existing customers and new business wins”.
The firm’s results show a 6.8% increase in the group’s pre-tax profit to £6.6m (2015:£6.1m), with group turnover increasing by 5.7% to £176.1m (2015: £165.3m) in the same period.
These figures include the turnover and pre-tax profit from the firm’s joint venture with Scottish haulier Hayton Coulthard Transport. However, while the joint venture saw turnover rise to £10.7m from £9m in the previous year, its pre-tax profit fell for the second year to £237,000 (2015: £327,000).
Speaking to MT, chief executive John Gregory confirmed Gregory Distribution had lost “a very big customer”, adding: “It was a challenging customer and through the tender process we parted company. However this is the nature of the transport sector. All companies win and lose contracts, but we are generally winning more than losing.”
Asked how the company is progressing in the current financial year, Gregory said: “It is hellishly challenging. This year remains as challenging as every year and in some ways more challenging. This is hardly a sector with many upward aspects. It’s a tough battle and the sector is extremely competitive, reflecting the UK economy as a whole.”
Gregory said the firm was experiencing an increasing trend for companies to tender more frequently. “Businesses are introducing procurement departments that 10 years ago did not exist in this sector. In justifying their existence, these procurement departments look to tender work and that process is definitely affecting the dynamic of the relationships between the customer and supplier.”
Looking to the future, Gregory added: “We anticipate a fall in both profit and turnover this year as it is very tough out there. However we are a 98-year-old company. We have been through numerous cycles and we are here for the long-term. We will ride this wave, as we have ridden others, remaining optimistic but always operating with one eye in the back of the head.”
Kay Transport’s brand and livery is set to be phased out, Gregory confirmed.
The group's structure will be “simplified” by integrating Kay Transport, which was bought in 2009, into Gregory Distribution.
John Gregory said: “We were running Kay as a separate business and now we are running it as one with Gregory Distribution because we generally consolidate the companies we acquire, as we did with Framptons.”
Asked if Kay Transport’s iconic red livery will change, Gregory said: “The livery and the brand will change over time and will gradually adopt the Gregory brand and our brown livery.”