Turnover up but profit down

Welcome to the Motor Transport Top 100 2018. This is the definitive list of the largest operators of commercial vehicles in the UK; by turnover; by pre-tax profit and by employee numbers. View the Motor Transport Top 100 2018 as an online PDF

Turnover latest year £308,526,000
Turnover previous year £279,751,000
Pre-Tax Profits latest year £7,272,000
Pre-Tax Profit previous year £8,837,000
Number of Employees latest year 3,582
Number of Employees previous year 3,340
Sales per Employee £142,675
Change in Sales per Employee 1.46%
Profit per Employee £3,106
Change in Profit per Employee -33.40%
Return on Sales 2.20%

Every year the Motor Transport Top 100 throws up its fair share of surprises, and this year there seems to be more than others.

On the surface, the fundamentals remain the same. Royal Mail top the list, followed by DHL. But after that there is some considerable change. After much consideration (and lobbying) we’ve included Menzies Distribution for the first time. This is a reflection of the growth of its O-licenced fleet and that it finds itself competing (and winning) against 3PLs. It is for the same reason that we omitted Smiths news (part of the Connect group businesses that includes Tuffnells Parcels) as its O-licenced fleet is rather small.

As a result Menzies becomes the eight member of the £1bn club. As well as the aforementioned Royal Mail and DHL, the likes of XPO Logistics; FedEx Corporation (including a sizable chunk of TNT); DPDgroupUK; Wincanton and UPS all have turnover in excess of £1bn a year. This club of ‘super-sized’ operators continues to grow each year.

Beyond that the consolidation trend continues. Culina now derives revenue from six different business line. Kinaxia will rise next year, particularly following its acquisition of AKW Group last month. And where would the likes of Turners (Soham) or NFT Distribution (now a key pillar in the Emergevest empire) rank if it were not for acquisition activity in recent years?

This growth is reflected in our overall averages: average turnover (on a like-for-like basis) is up 10.3% year-on-year. That’s bucking-the-trend, way-above-the-national-average growth.

The good news story is reflected in the average number of people employed: 3,582 per business in the Top 100, up 7.2% year-on-year. Road transport has a big engine that is humming.

But all this growth hides some pretty worrying fundamentals. Average pre-tax profit has fallen 17.7% year-on-year. This is surely a representation of rising fuel, vehicle and people costs across the board, putting pressure on logistics businesses ability to invest outside of key fundamentals.

Furthermore like-for-like profit per employee has collapsed, down 33.4% year-on-year. Admittedly every person employed in a Top 100 logistics business generals £3,106 of profit for investors, owners and families alike – but this is not a trend that can continue if logistics is to continue as a major growth story in the economy.

Sadly, there hasn’t been the time to drill deeper into these businesses as part of the 2018 Top 100. It would be a curious exercise to look at the debt position of these businesses, and see how much is being carried on the balance sheets of the largest businesses in logistics. Debt may be a fine financial tool to increase the size, shape and scope of any business, but controlling and paying it off is as important as anything else… maybe something to watch this space for.

Download the 2018 Motor Transport Top 100 as a PDF.