Margins fall again
Page 5
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HAULAGE profit margins have fallen again, according to an influential industry survey which also warns that even the most successful companies will need to work hard to reap any of the benefits of an industrial recovery.
ICC Business Ratios has studied the accounts of 100 leading haulage companies and found that even among them, the average profit margin achieved was only 3.7 per cent in 1983/84. That was a fall from 4.1 per cent in the previous year.
And it forecasts that intense competition between operators and from the own-account sector and British Rail will continue to depress margins to such an extent that firms will need to work hard to make any meaningful gains.
Bulk liquids hauliers and other specialists stand the best chance of growing healthily, ICC forecasts, and one of these firms, P&O subsidiary John Forman, was Britain's most successful profit performer, with a margin of 14.3 per cent in 1983/84.
United Parcels, the shining exception in the intensely competitive and loss-riddled parcels market (see p4), came next with 12.8 per cent. Only three other companies managed more than 10 per cent — Edwards of Hull (12.2 per cent), Heavy Transport (ECC) (10.9 per cent), and Transport Development Group subsidiary J. Stirland of Nottingham (10.3 per cent).
It attributes their success to tight credit control — the industry's average credit period is up from 55 to 56 days — and it is noteworthy that of the 10 companies which had the highest turnover, none is among the top 10 profit earners.
Indeed, four of those companies — National Carriers, SPD, Roadline (all part of National Freight) and Hercook Simpson Holdings — made losses. And the fastest-growing company — BET's United Transport International holding group — managed a profit margin of only 6.8 per cent.
Of the 10 companies which made the greatest strides in increasing their turnover, the top firm — BET's Murphy Brothers (now part of United Transport Distribution) — made a loss.
ICC commented: "It is disappointing to see small independent hauliers trading at a loss, with high current liabilities, and high rates of growth which may not be sustained.
"Few of these companies can have the heavy launching costs of regular scheduled services or new depots, and they have plainly failed to ensure that their regular contracts are profitable."