Conditions in the road transport market have "never been more challenging" the chief executive of Gregory Distribution has said.

Talking to Motortransport.co.uk, John Gregory said customers’ procurement departments were using the UK’s economic frailty as an excuse to drive down prices during increasingly frequent tendering exercises.

"Margins in this industry are not acceptable," said Gregory, who has taken the tough decision to shed underperforming business and take a turnover hit rather than keep unprofitable work.

"I personally think there can’t be a transport company in the country that doesn’t have at least some bad jobs among its work," he said.

The chief executive said that while there were opportunities out there, an increasing amount of work was simply not realistically priced.

Turnover at Gregory Distribution was 12.4% down in the year to 29 September 2012 at £77.3m (2011: £88.2m) newly published accounts show.

The company suffered a bad debt of £524,000 in the period when customer the Farmright Group went under. However, having taken on additional work, including more for Kraft Foods and Shanks Waste Management, the road transport business made a pre-tax profit before exceptionals of £1.16m, 11% up on 2011’s £1.05m.

During the period, Gregory took advantage of favourable conditions to exit from a defined benefit pension scheme, the Milk Pension Fund, it had inherited from the Milk Marketing board in 1994. This was recognised as a £7.6m exceptional item, which resulted in a paper loss for the year.

Last May the operator revealed it had renewed its farm collection contract with Dairy Crest.

  •  Gregory’s group turnover, which includes contributions from wholly owned Kay Transport and joint-venture Hayton Coulthard Transport, increased 0.6% to £116.5m in the year ended 29 September 2012. Pre-tax profit before exceptionals was up almost 25% at £2.5m.

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