Europa Worldwide Group saw profit plunge from £15m to £3m in 2023, as tough market conditions, the loss of a PPE contract and a major investment programme took their toll, but the company is predicting a return to around £15m in profit in 2025.
In a statement issued ahead of its annual results for the year to 31 December 2023, the group attributed the profit fall to high inflation levels during the period and weak UK economic growth.
This in turn led to a “significant” drop in demand in the European groupage market, Europa said, exacerbated by a reduction in ocean freight container rates, and the loss of a PPE contract at its flagship warehouse in Corby – all of which squeezed the company’s profitability.
At the same time Europa Worldwide was pursuing a major expansion programme, opening new branches, in Dublin, Cambridge, Cardiff, Rotterdam, Ostend, Shanghai, Shenzhen, Delhi and Dubai.
“Investments of this nature represent a substantial commitment at any time, but when coupled with the challenging economic environment, the net result has been to squeeze the company’s profitability,” the group said.
On the upside Europa Worlwide’s division Europa Road has grown its market share of the European groupage market to more than double the volume of any other UK groupage operator, the group claims.
During the year Europa Worldwide’s European road freight operation in the UK was restructured, with investments made in its customs teams and facilities to improve logistics support for customers’ export and import business post-Brexit.
Despite reduced volumes the company said it had “efficiently” increased market penetration of its customs product, Europa Flow.
Europa also relaunched and expanded its Belgium services, and opened a new sales branch in Rotterdam, as part of a drive into the Benelux market.
The company also expanded its European road freight footprint outside of the UK, by opening in Ireland. The group said the division has made “significant” progress in these markets, but added it has yet to move into profit.
In its Air & Sea division, it’s new branches in Dubai and Shanghai are now profitable, with its more recent offices in Delhi and Shenzhen “still progressing towards break even.”
Rob Jones, Europa Worldwide Group chief financial officer said: “Despite a dampened market which hindered sales across our services in 2023 we invested our profits in long-term projects which will pay dividends in the future.”
Andrew Baxter, Europa Worldwide Group chief executive (pictured), added: “2023 was a harder year, however, most of the reduction in profitability is due to investment. When we open new locations, we know that there will be a period of startup losses.
“The figures are overall in line with our projections and we are happy with the progress the news is making. As these sites and branches become more mature, they move into profit and contribute to the bottom line.”
He added: “Our approach has always been to focus on offering the best products, services, and solutions to meet customer needs, and we will continue this trajectory, being creative in our approach and maintaining the highest levels of service.
“We remain extremely proud of the way our teams continue to deliver under challenging market conditions and their dedication. We anticipate that 2024 will again be a tough one with limited growth and profitability remaining at a similar level, but we and our teams are committed to delivering for our customers.
“However, we are expecting profitability to return to around £15m in 2025.”
