Renwick on road to recovery
Page 54
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EXTENSIVE reorganisation in the multi-business Renwick Group has resulted in a dramatic turn around in profitability.
For the six months ended September 1976, a profit of £136,000 was recorded compared to a loss of £196,000 in the similar period of 1975_
Satisfactory results are expected for the full year, but these earnings will still be at a relatively low level compared to the trend in previous years_ Renwick is involved in a number of business activities including freight transport, motor distribution, travel, property development and fuel distribution.
The freight division, which includes road transport as well as some shipping interests, had a turnover of £9.7 million, representing 29 per cent of the total; the motor division accounted for 23 per cent, the travel side for 33 per cent and fuel distribution and other activities represented 15 per cent of overall sales.
The group has had a rapid rise in turnover over the past few years, although this was partly due to acquisitions in this period. Table 1 shows that total turnover reached £33.7 million and that the average growth of sales was 39.5 per cent between 1972 and 1976.
The freight division was partly responsible for this growth, and expanded rapidly in 1973-74, as a result of the acquisition of William Nuttall Transport Ltd.
Graph 1 shows the trend in turnover for the group as a whole, as well as for the freight division since 1972_
Profits
The profitability of the group has been very erratic, though reasonable earnings were recorded up to 1974. Significant losses were reported in 1975-6 (see table 2) mainly due to the poor performance of the freight and property sectors.
In particular, the freight division recorded a loss of £476,000 compared with a profit of £106,000 in 1975.
Reorganisation of freight division
During 1975-1976, various steps were taken to streamline the group's activities, and certain loss-making activities were reorganised and closed down.
In particular, William Nuttall and Sons and Nuttall Euro-Link were sold to Ridham Freight Services, a company which is jointl) owned by Renwick Group and Bowater.
Result of this transaction has been to broaden the base of join activity with Bowater and also to consolidate the freight interests within one company.
The freight division has been affected by over-capacity and escalating costs, and because of these factors a number of depots were closed down and the number of vehicles were reduced to 340. Reorganisation was quite costly and the full benefit was not expected to be felt until 12 months later.
The property side was also reduced and bank borrowings wen cut back on property development. Both the travel and the fuel side continued to trade profitably during 1975-6.
Current position
At the interim stage, the benefits of the reorganisation programme were quite noticeable and the group returned to a profit-making position_ At the same time total sales advanced to £18.8 million, a rise of 9 per cent compared to 1975.
It was reported that the travel division and the fuel side were progressing well but the freight division had shown a reduction in turnover due to the cut-back made the previous year.
The directors have said that profits are expected to be "satisfactory"' for the full year, but no firm forecast has been issued at this stage. Moreover, the directors decided to pass the interim dividend in order to preserve the company's resources.
The future
The full benefits of the latest reorganisation should be felt in the second half of the year and it is possible that total earnings c over £300,000 will be achieved for the full year, though they will depend on general economic conditions.