DX Group maintains expectations as volumes pick up
Freight and delivery provider DX Group reported an improving recovery in both its divisions on Tuesday, with volumes picking up since the strictest Covid-19 regulations began to be lifted in England.
The AIM-traded firm said that as an essential service provider, it continued to maintain operations at all of its depots and service centres through the UK’s Covid-19 lockdown.
It said that, since its last update at the end of May, trading in both its freight and express divisions had continued to improve, with group revenue for June was just 3% below its pre-pandemic forecast levels.
The board said that improved performance across both divisions primarily reflected a recovery in volumes from existing customers, as well as some new business wins.
As a result, the DX board said it expected revenue and adjusted EBITDA for the full year would be in line with current market forecasts, and that it would report an adjusted pre-tax profit on an IAS17 basis.
That would be DX's first full year adjusted pre-tax profit since the current management team initiated its turnaround plan for the business in the spring of 2018.
The company said its net cash position of £12.3m at year-end, swinging from net debt of £1.3m year-on-year, was better than market expectations, although it had benefited from payment deferrals of £11.9m in total, including VAT and other agreed payment holidays.
Volumes were continuing to rise, the firm said, supported by “strong levels” of customer service.
Both divisions were experiencing a business mix slightly more weighted to business-to-consumer than previously expected.
DX said its £10m capital investment programme, to be completed over the course of the 2020 and 2021 financial years, was progressing as planned.
“Having launched our turnaround plan two and a half years ago, we are delighted to report the company's expected return to adjusted pre-tax profit,” said chairman Ronald Series.
“It demonstrates the hard work, expertise and resilience of our people.
“We have a clear vision for ongoing growth and remain wholly focused on the next stage of the company's development.”
DX said it expected to announce its full-year results in late September.
Shareholder Gatemore Capital Management was cheering the update from DX, with managing partner Liad Meidar saying the activist investor was “pleased” to see continued improvement at the company.
“This represents the first full-year profit since the current management team was installed, demonstrating the expertise of DX’s people and the successful completion of the turnaround plan, despite the disruption caused by Covid-19.
“As long-term investors in DX, we look forward to the company’s continued earnings growth in the coming years.”
At 1341 BST, shares in DX Group were down 3.97% at 16.32p.