Stobart reports growth but dampens full year profit prospects

Among its operational highlights, Stobart said its several significant new agreements included more than £40m-worth of new business for Tesco in the UK and Ireland, an additional agreement with the soft drinks manufacturer Britvic and a new £7m a year contract with Irn Bru maker A G Barr, and major contract renewals for Procter & Gamble, Gerber, Knauf and Crown. A new railway station and control tower at London Southend Airport were near completion with advanced discussions ongoing with interested airlines including Aer Arann with which Stobart has agreed a conditional five year operating agreement with volumes expected to grow to 300,000 passengers a year. Chief executive Andrew Tinkler said the group had again shown strong growth and resilience in the business with underlying profits up and Eddie Stobart performing particularly well after the new contract wins. He went on"Changes in the way our customers operate have provided challenges to us which we are addressing. In particular we have faced shorter lead times and volatility in volumes. In the long term we are well placed to take advantage of these changes in the market. However, the company had slightly reduced its full year profit expectations as a result of reduced spend by Network Rail and increased overall finance costs, Tinkler warned. He concluded: "We are also cautious that 2011 may see volumes affected by the increase in VAT rate and the Government spending review. However, in the long term we see this as positive for the economy and our business. Overall, we look forward to further growth in the second half as new contracts fully contribute. Our efficient green fleets and innovative transport solutions continue to impress customers and our improved assets give excellent opportunities for adding value." Revenue for the six months to 31 August were up 11.7% to £243.7m (2009: £218.2m)while normalised pre-tax profit rose 24.2% to £15.4m (2009: £12.4m).