Profit optimism
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GUARDED optimism about profit margins in road haulage this year comes from Transport Development Group chairman Sir James Duncan following announcement of the group's annual results.
Margins were no better in UK haulage last year than in 1983, he said. Asked if margins would improve in 1985, he said: "I'm growing tired of saying that at some point road haulage margins have got to recover."
But he noted encouraging signs of confidence among investors. TDG's share price has risen by one third in the past four months.
TDG has road haulage and warehousing subsidiaries throughout Britain, and although 40 per cent of its capital is now employed overseas, it is still seen as a barometer of British road transport.
Group turnover was up by 18 per cent at £434.7m against £367.7m in 1983, with pre-tax profit up by 15 per cent at £24.1m compared with £21m. Operating profits were up by 15.2m to £31.5m.
Capital expenditure was up substantially at £47m, 44 per cent more than 1983. Group costs rose from £194m to £241m.
Sir James said that the company has made substantial investments in distribution, including parcels companies Independent Express and Tuffnells, and in dedicated warehousing.
TDG is in the market for multi-million pound dedicated distribution contracts, and is able to meet the necessary investment demands, he said.
TDG has adopted a higher corporate profile recently to identify that its subsidiary companies are "quite capable of undertaking major projects". But the policy of locally autonomous management is unchanged. New investment in lorries will have to be justified. "The industry has come through a pretty hard, long, bleak period of trading. No doubt we're all going to be stretched to find the cash to replace vehicles," he said.
Independent Express, the new nationwide express freight service, lost £1.95m last year. Sir James conceded that it has taken longer than expected to move into profit, although it is now within resonable prospect of moving from loss into profit.
Independent is in a market where acceptable profits can be made, he said.
TDG's group forecast for 1985 is for "another good year".