Expect Distribution Group saw pre-tax profit fall by a fifth last year after high interest rates resulted in “significant” financing costs on a warehousing investment, according to its latest financial results.

The company, which is a founder member of Palletline, employs around 375 staff and operates a 140-strong fleet. It has its headquarters in Bradford and runs four warehousing sites in West Yorkshire, which provide over 70,000 pallet spaces. 

Clients include fast moving consumer goods brands Boost Drinks and Astonish, national retail chain Card Factory, Stores Direct, as well as major customers in the pharmaceuticals, construction, automotive and office furniture sectors.

Reporting its latest annual results to 30 November 2023, the group revealed a rise in turnover to £51.7m (2022: £42.4m) boosted by new contract wins during the year in the contract logistics and warehousing divisions. However pre-tax profit slid by 20% to £1.9m (2022: £2.4m) during the period.

On the upside EBITDA - a measure used by management to determine underlying trade performance - fell by just 2.1% to £114,000 during the year.

The company’s business review for the year hailed a “progressive year of growth” thanks to long-term, contracted business in its contract logistics and warehousing divisions.

However, it noted that continuing industry pressures combined with high levels of inflation resulted in significant cost increases across all areas of the business.

 In August 2023 the group bought Pallet Plus, a £10m turnover business, based in Colchester, as part of its expansion plans in the South East. This was the first purchase made by Expect Group, which the company said represents 20% growth for the group.

The group review added: ”The plan is to keep the business operating as a separate entity but to integrate it with Expect Distribution and realise operational synergies for the benefit of the group.”

During the year Expect Distribution boosted warehouse capacity at its Thornton Road site in Bradford. Whilst this added “significant” overheads it had also “unlocked additional capacity for growth”, leading to new customer relationships and a “significant” number of new jobs, the company revealed.

Turning to this year, the review said Expect is continuing its focus on long-term partnerships with new and existing customers, whilst investing “heavily” in the workforce.

The review also revealed that In May this year Expect had acquired a customer list, adding: “At the time of finalisation of the accounts the total consideration has not been finalised.”

The review concluded: “The tough trading conditions continue to bring challenges to our growth aspirations, but the directors are confident that we have the strength to navigate through and continue with the path of positive growth within the business.”