John G Russell (Transport) said its purchase of the trade and assets of Freightliner earlier this year will drive down profits in the short term, but that it was a strategic acquisition for future growth.

The Scottish logistics company bought the business in April for £18m via its 100% owned subsidiary Russell Railroad.

The acquisition was funded by a combination of an additional term loan of £10m with the remaining purchase price being funded through cash resources.

At the time, the group CE Alan Poulton said it would unlock new supply chain opportunities and give customers increased connectivity and faster deliveries.

In its latest set of accounts, for the financial period ending 31 March 2024, the company said the acquisition of Freightliner was strategic for business development purposes and it took advantage of synergies available in the container storage and transport industry.

“The directors are aware that currently the business acquired has been loss making in the past and will drive down profits for the overall group in the near future and will require significant capital investment which the directors are prepared and able to meet,” the company said in its accounts.

The results showed that during the period, John G Russell (Transport) reported revenues of £87.5m, down 1.6% compared to 2023.Pre-tax profit reduced by 6.2% to £8.1m.

“The group continues to focus on improving asset utilisation in road, rail and warehousing,” it added.

“Across the past 12 months demand across our core markets has remained stable. We have inserted price increases across all key customers to offset an increase in cost base driven by inflation.”

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