DX (Group) plc returns to full-year profitability for first time in four years

Finance 6 min read 17th Sep 2020
life story of a parcel hero

DX (Group) plc returns to full-year profitability for first time in four years

In its full year report issued today, DX, a leading provider of delivery solutions including parcel freight, secure courier and logistics services, revealed its first full year adjusted pre-tax profit for four years. The milestone comes nearly three years after a new team, headed by Lloyd Dunn, CEO, and Ronald Series, Chairman, joined the business to turn it around and drive growth.

The Group reports a 2% increase in annual revenue for the year to 30 June to £329.3m and an adjusted pre-tax profit of £1.8m, a £2.0m turnaround from a loss of £0.2m last year. The Group also reports a healthy net cash position of £12.3m. 

DX Chairman, Ronald Series, commenting, said, “DX has made significant progress, and the Company’s return to an adjusted pre-tax profit, despite the challenges of the coronavirus pandemic, marks the completion of the first phase of our turnaround. These strong results were largely driven by the improved performance of DX Freight, and reflects the hard work we have put into this division over the past two years.”

As an essential service provider, the Group remained fully operational throughout the nationwide coronavirus lockdown. While overall delivery volumes initially fell by around a third after the emergency government measures were introduced, volumes have steadily recovered and are now above levels anticipated before lockdown.

A key factor in the Group’s return to profitability was the improvement in its Freight division, which specialises in the delivery of larger and heavier items, including those with irregular dimension and weight (“IDW”).  Revenue at DX Freight improved by 7% over the year to £169.0m and the EBITDA loss reduced by 85% to £1.2m, with the division moving into profitability in the second half of the year. The division has increased its capacity and efficiencies, opening new depots and installing new mechanisation equipment at its main Willenhall Hub and regional sortation sites. The division recently unveiled new depots at Oxford and Westbury, and further depot openings are planned. 

Results from the DX Express division were, as expected, affected by the completion of its contract with HMPO, as well as by the coronavirus crisis.  Revenue decreased to £160.3m from £163.9m and EBITDA to £23.3m from £26.9m last year. The division is focusing on the expansion of its Secure Courier service, which operates in the growing parcels market. During the year, the division launched its Expected Time of Arrival (“ETA”) functionality, which enables a 2-hour delivery window and ‘in-flight’ re-scheduling options and keeps customers informed of the progress of their delivery. During the second half, DX Express supported the national coronavirus effort by handling medical specimens and collecting testing kits.

The Group reported that elements of its £10m capital investment programme to strengthen IT systems, expand its network and improve operational efficiencies had been strategically paused with the onset of the coronavirus crisis, but these are now firmly back on track. 

Trading in the first few months of the new financial year is ahead of the same period last year, and the Group has a healthy pipeline of new business opportunities.

Ronald Series, Chairman of DX, commented:
“We have now established solid foundations upon which to move into the growth phase of DX’s turnaround. We believe that there are significant opportunities for both divisions, and that we are in a strong position to rebuild profitability, by improving efficiency, productivity and margins.”

Lloyd Dunn, CEO of DX, commented:
“The Group’s return to profit is a terrific achievement by everyone at DX. To have accomplished this during a time of crisis is even more tremendous. This sleeping giant of a business is now awake and we are now firmly focused on driving growth and rebuilding profitability.” 

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