Applied profits slide
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• Rates pressure from ever more demanding retail customers forced distributor Applied Distribution to warn last week that it will only break even in the second half of 1996.
Its share price halved after chairman Sir Hugh Bidwell said customers were demanding "even better" service but were unwilling to pay extra for it. He blamed demands for more frequent deliveries and a failure to improve its multi-user business for lower profits.
Unexpectedly high costs at frozen food distributor Blue Cap Logistics, terminating unprofitable contracts and replacing lost business are also proving more expensive as retailers turn to in-house or single distributor contracts. "None of the actions there involves any assumption as to large-scale redundancies," finance director Rod Gray says. "We try to reallocate operations rather than make redundancies."
Applied has changed its management structure to put group chief executive Mike Rowley in direct touch with its northern and southern depots. But it says that unless it can replace expiring contracts, next year's operating profits will be little better than this year's.