(Alliance News) - Trucking company Eddie Stobart Logistics PLC on Monday issued a profit warning, suspended dividend payments, and said it is looking to raise additional cash.
The logistics company also said the senior management team, led by Chief Executive Sebastien Desreumaux, has commenced a wide-ranging operational review to improve margins and overall financial performance, taking into account current market conditions.
Eddie Stobart said adjusted operating profit, or adjusted earnings before interest and taxes, for the year ending November 30 will be significantly below the board's expectations due to adverse performance, delays in the implementation of operational efficiencies, provisions against underperforming contracts, and lower than planned property utilisation.
In financial 2018, the company recorded GBP55.3 million adjusted EBIT and revenue of GBP843.1 million.
The company, which is facing a takeover offer from DBAY Advisors Ltd, further said it is relying more heavily on debt facilities due to the reduction in profit, poor cash collection, and the dividend policy.
As a result, the company has decided to consider considering all strategic options, including the potential for raising new equity, and is currently engaging with lenders. It has also decided to suspend the payout for financial 2019, after returning 6.30 pence in its previous financial year.
"The board believes the immediate issues that the group faces can be addressed with positive steps already being taken. The board remains confident in the strength of the company's network and operational capabilities in providing a full end-to-end supply chain solution to our customers," Eddie Stobart Logistics said.
For the first half to May 31, the London-listed company expects revenue to total GBP450 million and underlying Ebit to be between GBP10 million to GBP11 million. Net debt at May 31 is predicted to be GBP155 million.
In the first half of financial 2018, the company posted revenue of GBP359.3 million and Ebit of GBP18.1 million. Net debt stood at GBP114.2 million.
Eddie Stobart also said a previously announced review into financial statements is not yet complete, and any impact on first-half results is not yet been determined.
In late August, Eddie Stobart reported Chief Executive Alex Laffey would stand down and shares would be suspended temporarily amid a delay to interim results. The results delay was after Eddie Stobart looked to confirm the impact of accounting changes related to revenue recognition and receivables recovery.
Shares in Eddie Stobart continue to remain suspended, pending the release of its first-half results.
