Portfolio

Xpediator trading 'broadly in line' as it tightens belt for pandemic

By Josh White

Date: Tuesday 31 Mar 2020

Xpediator trading 'broadly in line' as it tightens belt for pandemic

(Sharecast News) - Freight management company Xpediator updated the market on how it was responding to the Covid-19 coronavirus pandemic on Tuesday, reporting that from the beginning of the outbreak, it had followed the operational guidelines provided by governments in each market it operated, changing working practices to incorporate social distancing across its offices, depots and warehouses.
The AIM-traded firm said that where possible, individuals were working remotely from their homes.

With the "significant effort" of its people, the company said it was continuing to operate effectively while also taking the appropriate actions to limit the spread of this virus.

So far this year, it said activity levels had remained "broadly in line" with management expectations, with high demand from some sectors and other areas slowing.

In response, it said it had sought to allocate resources to match demand across the business.

"While it is hard to make any predictions under these extraordinary circumstances, based on very recent trends, the board believes that demand for our freight management and warehouse services, both in the UK and Europe, will remain sufficiently robust overall but will be more volatile in any given month, and that we have the systems and protocols in place to meet this demand," the board said in its statement.

As it had previously guided, Xpediator intended to announce its audited final results for the year ended 31 December in April, saying it expected to report turnover up 19% to ?212m, with profit before tax "slightly above" ?5m.

Trading in the first three months of 2020 had been in line with expectations, the board said.

Patterns had been different, however, with revenues from Chinese customers reduced in the first two months, offset by higher-than-expected demand from other sectors such as its European road freight forwarding and Pall-Ex in Romania, with Chinese volumes starting to improve in recent weeks.

Warehouse utilisation was described as "good", and was expected to continue across all areas of operations.

"The freight forwarding division is of course asset light and has the ability to flex supply requirements against demand in a timely fashion.

"We have experienced supply issues on equipment and therefore buying and selling prices have increased to reflect this."

However, given current material uncertainties, Xpediator said it was not practical to give longer term guidance at the current time until there was greater clarity around the duration and full effects of Covid-19 on its customers, suppliers and markets.

"We are benefitting from our diverse operations across the UK and Europe which has already helped us offset challenges in some areas with higher activity in other markets.

"However, there are challenges to navigate such as obtaining international drivers, general increases in costs and more complex border checks."

Xpediator described itself as an "asset light business", noting it did not own a large fleet of trucks, had low fixed overheads and typically acted as a broker to its clients, sourcing capacity from the market as required.

As at 31 December, the company had net cash of ?6.9m, and reportedly had sufficient headroom within the business to manage anticipated working capital requirements.

In addition, it said it was conducting a "comprehensive review" of the business, and had reduced costs in specific areas where activity levels had fallen or were likely to reduce as a result of the disruption caused by the pandemic.

Cost savings were expected to come from furloughing staff, agreeing temporary pay reductions and reducing other overheads.

"The board [is] confident Xpediator is well placed to manage its financial and commercial commitments during this extraordinary time and can emerge well-positioned for growth when market conditions return to normality.

"The board continues to intend to propose a final dividend for the year ended 31 December, but the amount is yet to be determined given the fundamental uncertainties that currently exist in the market.

"The board is closely monitoring the situation across the business and will make further announcements as and when appropriate."

At 1557 BST, shares in Xpediator were up 11.11% at 25p.

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