The German parent company of logistics firm Hellmann Worldwide Logistics has pledged to back its UK division until "at least" September 2020, after the Lichfield-based firm saw its operating loss almost double last year.
According to its latest annual results for the year to 31 December 2018, the company saw its operating loss swell to £2.4m (2017: loss of £1.7m).
This was despite turnover rising to £75.6m (2017: £74.9m), which the company attributed to its contract logistics division moving from Lichfield to a larger capacity site in Burton upon Trent.
However, £4.1m of dividends from affiliated and associated group companies, including £577,000 from joint venture Rudolph & Hellmann Automotive, helped the company deliver a pre-tax profit of £1.6m in 2018 This compared to a pre-tax loss of £1.6m in the previous year.
The company also undertook a major restructuring, which saw the liquidation of its subsidiary Kensington Freight Services and its trade and assets transferred to Hellman Worldwide Logistics this January.
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In its strategic report the company said the key challenges in the year had been “operational issues”. These included the opening of its new contracts logistics site in Burton-on-Trent, an 87,716sq ft premises taken on a ten-year lease; “changes in seasonal trends”, which it attributed to uncertainty around Brexit; and the need to reduce operational costs in the business.
Pointing to the restructuring of the group following the liquidation of Kensington Freight Services, the directors said they “are confident that the work done to date will continue the move back towards profitability”.
The report also noted that the "explicit support" from parent company Hellmann Worldwide Logistics SE during a review of the business to December 2021, had "reassured the directors that the company has the necessary resources to remain in operational existence for the foreseeable future".
It added that the directors had obtained a letter of support from the parent company for "at least" 18 months from 26 March this year.
In a statement the company told motortransport.co.uk: "Our German parent company continues to offer long-term support to the UK business. The issue of an 18-month letter of support is an annual audit requirement. The group as a whole had a very successful fiscal year 2018.
"Operating loss for the UK business increased by 43% as a result of one-off costs incurred in relocating its Lichfield Contract Logistics operation to a new site at nearby Burton upon Trent. As well as planned costs, delays in outfitting the new warehouse resulted in additional labour costs to enable go-live deadlines to be achieved without disruption to customers.
"One-off costs were also incurred in the restructuring of the Hellmann UK legal entity structure, to reduce ongoing administration costs and streamline operations."
The statement added that the liquidation of Kensington Freight Services and its transfer "took place to increase internal efficiencies, and to provide our customers and suppliers the simplicity of dealing with a single Hellmann legal entity in the UK. All operations and systems were transferred successfully without impacting operations.
"The merged trades now operate as Hellmann Worldwide Logistics Limited. "The term 'liquidation' should be taken positively in this context, in that from the viewpoint of our customers it is business as usual - the change was for internal efficiencies only."
