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Xpediator PLC

Xpediator's profits to be hit as it invests in infrastructure

The generation of operating cash flow remains satisfactory.

Union flag pennant and EU flag pennant pointing in different directions
Extra costs have been incurred preparing for a "no deal" Brexit

Xpediator PLC (LON:XPD) said demand for its freight management services remains strong but this year’s profit will be materially below expectations.

The company is on course to meet market expectations for revenues in the current year of more than £200mln but profitability will be sub-par, owing to a number of factors including a decision to reconfigure the group's warehouse in Braintree, Essex, so that it is suitable for higher-value fulfilment business, which will result in a loss of business for a few months.

READ Xpediator rejigs management team for next phase of growth

Profitability has also been dented by an increase in labour rates at Import Services Limited, part of its UK logistics division, which it has not been able to pass on to customers.

EshopWeDrop, the group's e-commerce business has generated lower volumes in the current year. Michael Grange, currently the group's chief information officer, will now focus solely on the development of the group's e-commerce business and his current position will be filled internally.

Turnover in Regional Express is currently tracking below that achieved in 2018 but this is largely as a result of management focusing attention on securing two valuable and strategic contracts, Xpediator said. If landed, the contracts are expected to generate material and sustainable profit growth in 2020 and beyond.

For a logistics specialist such as Xpediator, preparations for Brexit are of crucial importance and the group revealed that some additional costs have also been required to prepare for the consequences of a "no-deal Brexit".

On the plus side, the turnaround at the Benfleet operations continues, the Anglia division is performing strongly while the Romanian Pallex business and the Affinity division are also trading well.

“We are disappointed to be below our profit targets for this year; however, critically customer demand for our services remains strong reflected in our continued sales growth which, together with the investments we have made across the business, particularly into information technology makes us confident in the group's future growth prospects for 2020 and beyond," said Stephen Blyth, the chief executive officer of Xpediator.

Quick facts: Xpediator PLC

Price: £0.27

Market: AIM
Market Cap: £36.58 m
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