. 1 1D 0=2 07)xlmill m rra c_i )iit by George Malcolm
Page 59
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The cream of Unigate
IT IS SURPRISING what is revealed in company reports — especially those of companies which you do not immediately associate with transport. Take Unigate, for example. Not a company with much in the way of transport interests, the ordinary member of the public might suppose, although he might think of milk floats. Yet its divisions, Wincanton and Giltspur, constitute two of the biggest transport interests in the country.
This year's annual report from Unigate reveals that the Wincanton fleet now numbers 7,400 vehicles compared with 6,400 in 1983. That is massive. But there is an even more interesting statistic. Wincanton Contracts' contract hire fleet now totals 4,600 compared with 3,800 at March 31, 1983, "and customer enquiries continue at a high level." But that 4,600 figure is all cars, not commercial vehicles. The company reports that "limited resourse financing now available helped to increase the post-interest profits of Wincanton Contracts by 40 per cent."
The 7,400 vehicle figure includes the fleet at Wincanton Transport which now numbers 1,600 vehicles on milk food and chemicals in road tankers and on chilled distribution services. There are also 1,100 vehicles on rental and contract hire. The comments on Wincanton Transport are particularly revealing because they reflect trends in specialist transport sectors.
Improvements in the food section were the main contributors to Wincanton Transport Group's progress, says the report, adding that this was achieved despite lower milk movements than in 1982-83. But the petrochemical business, too, was stronger than anticipated and the company's chilled distribution activities continued to generate significant third party opportunities as market demand grew The company reports heavily competitive conditions in the vehicle rental market.
The Wincanton division as a whole made £8m profits in 1983-84, up from E6.4m in 198283, with external turnover up 12 per cent at £170m. Only 13 per cent of the division's turnover is with other Unigate Group companies.
What the report has to say about Giltspur is also of note, even though Giltspur Bulien — the main transport activity — is one of half a dozen or so divisions contributing to Giltspur's total turnover.
It says that after two years of indifferent trading, during which every operating company rationalised and revitalised its infra-structure, Giltspur achieved record results. It more than doubled its operating profit to £8.2m and returned a creditable 45.8 per cent on trading capital employed.
On transport it says that the acquisition of 51 per cent of Anglo-European Transport Holdings to strengthen the existing white and brown goods distribution business, helped Giltspur Buliens Transport Services to a 50 per cent increase in profits. There was, despite much lower demand in the US military removal area, and severe prices competition in the expanding household and office removal markets.
A fascinating insight into how Unigate copes with controlling its massive transport interests is given elsewhere in a section headed Wheels which starts: "To say that the entire Unigate Group runs on wheels is no exaggeration." Transport is crucial to Unigate's production and profitability, as well as its retail distribution. This is reflected in the existence of a transport committee. Composed of senior divisional managers from throughout the Unigate group, it is chaired by the managing director of the Wincanton group. Its purpose is defined as being to co-ordinate Unigate's transport policy towards trade and also to Government and EEC matters.
While Unigate's transport interests seem to be flourishing, the same story is not apparent elsewhere. The Lex Service ' Group in its half year statement for the year to July 31 is obviously not too happy. It reports that results from its transport businesses were disappointing. The markets in which they operate remain extremely competitive, the company comments, causing pressure on profit margins. Lex Wilkinson, however, increased its turnover and achieved a small profit improvement. Investments made in new products and services in the company's specialist transport businesses "are not yet producing adequate returns, and profits were particularly depressed."
A company that is doing rather well at the moment is United Transport International, the subsidiary of the British Electric Traction Company, judging from its annual report and accounts for 1983.
UTI has considerable interests outside Great Britain through its own subsidiaries in Britain, Holland, Belgium, France, Switzerland, West Germany, USA, Brazil, Zambia, Hong Kong, Singapore, Australia, Fiji, New Zealand, Japan, Kenya, Mombasa, Malawi, South Africa, Swaziland and Zimbabwe. It operates a wide range of general and specialised freight, passenger transport, tourism, containers and freight forwarding, with related services.
In his chairman's statement, Paul Rudder describes the results, which are £5.3m better than in the previous year, as being well ahead of expectations. The major contributory factor to the overall results for the year, he said, was the performance of the group's passenger companies, particularly in South Africa.
Mr Rudder makes the interesting point that although the group operates in areas that appear to have difficult economic industrial problems and, at times, political instability, the real problems are mainly engendered by the vagaries of climate.
In the parent company's report (BET), the group's managing director N. Wills gives details of the restructuring of UTI's activities in the past year. He says that "during the year UTI continued to streamline its management and ownership structure, and to concentrate its resources further in specialist transport services. The remaining four per cent of the equity in United Transport Overseas (UTO) was acquired. UTI completed the process of transferring European subsidiaries from UTO to the United Transport Company (UTC) and it made a number of changes in ownership and structure in each area."
Of the operations in Europe he says that tanker operations in Britain and Holland were major contributors to significantly higher profits. Another tanker company, Archibald Brechin, was acquired, he reports. Container operations performed well and the heavy haulage companies improved their results against strong competition.
"Distribution activities were further expanded and a new warehouse for High Street deliveries will open shortly. Hill and Delamain was moved from UTO to UTC and is being integrated with the other forwarding companies under a new overall management team to increase efficiency and the range of services." He reveals that — as in other big companies of late — the general haulage fleet was reduced.