Eddie Stobart profits boosted by contract wins, acquisitions

(Sharecast News) - Logistics group Eddie Stobart posted a jump in full-year profit and revenue on Thursday thanks to contract wins and organic growth.In the 12 months to 30 November 2018, adjusted pre-tax profit shot up 31.9% to £49.2m on revenue of £843.1m, up 35.1% on the previous year, driven by new contract wins with an annualised total revenue of £162m, organic growth from existing customers and contributions from its acquired businesses.Key contracts won during the year include PepsiCo Walkers, Britvic, Cemex and Tarmac, while the company also renewed contracts with Johnson & Johnson, Unilever and Coca-Cola. Revenues in the e-commerce segment were up 65% to £171m, while retail revenues increased 43% to £241.1m and the consumer business saw a 26% rise to £182.1m.In addition, Stobart highlighted a continued strong performance from its acquired businesses iForce Group, The Pallet Network Group, The Logistic People and Speedy Freight.The group declared a final dividend of 4.76p a share, taking the total dividend for the year to 6.3p, up 8.6% from 2017. Meanwhile, net debt increased to £159.7m from £109.5m in 2017, partly reflecting new debt associated with the acquisition of TPN.During the year, the underlying EBIT margin reduced from 7.8% to 6.6% as a result of costs incurred to implement new contract wins.Chief executive Alex Laffey said: "We were pleased with our strong performance in 2018, during which we made significant progress in delivering our strategy of becoming a full-service logistics and supply chain organisation."We continue to develop our end-to-end supply chain capabilities and in June acquired The Pallet Network, which gave the group a presence in pallet distribution across the UK and provides cross-selling opportunities to serve our customers' growing needs. All of our acquired businesses traded in line with expectations during the year and delivered their planned synergies. "Whilst we remain mindful of the current political and economic uncertainty, we are confident that our unique operating model provides us with the flexibility to respond rapidly to changing market conditions. The new financial year has started in line with the board's expectations."Berenberg said the results represent the strength of the ESL model and a real step-change for the business in its ambitions to become a leading end-to-end solution provider."While there have been costs from this growth (as seen in the margin and working capital investment in the year), we believe that the company will see the benefit of FY18 in the years to come, and forecast further growth from the business in FY19E, as margins and cash generation normalise."The bank reiterated its 'buy' rating on the stock but cut the price target to 160p from 200p, reflecting a de-rating in its peer comparison group.At 1015 GMT, the shares were up 0.6% at 98.55p.