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Barometer time for hauliers

4th May 1985, Page 60
4th May 1985
Page 60
Page 60, 4th May 1985 — Barometer time for hauliers
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Which of the following most accurately describes the problem?

IT'S BAROMETER time for hauliers again — in other words the Transport Development Group has published its annual report for 1984. And its profits last year at £24,060,000 on a turnover of £434,651,000 are a record.

This shows that 1984 was a year when things improved, at least for the bigger, better-run cornpanies.

The comments in the report give pointers to the state of the industry and I wish other firms were as forthcoming — not just about turnover and profit levels. How much has the company borrowed, and has it borrowed too much in relation to turnover, profits and capital employed?

The TDG keeps a careful eye on borrowings. Note this comment: "The rate of capital investment in 1984 was exceptional. Net borrowings have risen by £26m. Although such borrowings are still within prudent limits, it is not the intention that they should be materially increased."

The TDG indicates that the ratio of operating profit to turnover rose to 7.3 from 7.2 per cent and ratio of operating profit against capital employed improved to 14.5 from 14 per cent.

What does the TDG say in general? There was little change in the level of activity for road haulage companies in 1984, Fleet earnings improved, but in most cases by an amount barely sufficient to • meet increases in principal operating costs of wages and fuel. Fuel prices rose substantially in and where margins widened; it had usually been because of vigorous activity in trimming fixed costs and raising efficiency.

Haulage continued to contract; margins still fall short of what is needed for good health.

The miners' strike, the directors say, was acute and direct in the case of one or two hauliers. For the remainder, the demand for services was weaker than it might otherwise have been. Few TDG companies operate tippers.

The directors were more worried about the dockers' strike, commenting: "The dockers' strike, notably at ports subject to the archaic observances of the National Dock Labour Scheme, although short was damaging, and the effects lingered on for several weeks."

The contract hire fleets, as usual, made a sound contribution to profits, and the specialised distribution fleets were very active. There has been much growth in recent years of dedicated haulage operations working closely with successful customers.

In contrast, the TDG move into parcels carrying has not been profitable. The impact of the new express freight service on the results was marked and needed to be kept in mind in any consideration of the overall results. The establishment of the company concerned — Independent Express Corporation — had been more prolonged and more costly than was forecast. The business had a very good reputation and while its activities were at last within a reasonable prospect of moving from loss making to profit earning, in 1984 the establishment of the business led to a loss of approximately £2m. This sum had been charged against profits.

On the other hand TDG's other parcels activity, Tuffnells Parcels Express, has grown almost out of all recognition. Tufnells had acquired several small businesses and had built three new depots. The business was profitable and "The benefits of the investment made in 1984 will be felt increasingly as time goes on."

Rental and contract hire operations had proved attractive and in October 1984 the company acquired a 75 per cent interest in Glasgow-based Swift Trucks, operating a hire fleet of some 600 commercial vehicles up to 7.5 tonnes weight and 60 cars.

P&O's annual report is presented in a different fashion; its activities are still shipping oriented and it does not comment on the general scene in the same way as the TDG. Nevertheless it has interesting comments on P&O European Transport Services.

The results from its international haulage were lower than in 1983 because of industrial action at the UK docks. However, domestic UK haulage both in the road tanker and container carrying companies improved with Ferrymasters and P&O Roadtanks the best performers.

On a more gloomy note, the British-based commercial vehicle manufacturers continue to find life tough, judging from Bedford and Leyland.

Bedford reported a net loss of £62.4m for 1984 on a turnover of £336m. In 1983 the loss was £52m on a turnover of £340m. Although the company made significant advances in UK sales, depressed markets worldwide continued to have an adverse impact on profitability, Anticipated improvement on the E52,2m loss in 1983 was frustrated by a decline in export volume; the seven-week West German metal workers strike; disruption associated with the company's wage negotiations; and the high level of dealer support necessary because of extreme competitive activity.

J. T. Battenburg III, Bedford's chief executive and general manager, admits these results are disappointing, but points out that substantial interest charges were incurred in borrowings to finance major investment programmes; £70m was spent on new products and facilities and £12m on advanced engineering technology.

The results included the onetime expense of consolidating and rationalising production buildings. "I am confident we will achieve operating profit, on schedule, in 1986," he says.

"The company expects the export decline to be reversed in the current year," Bedford commented. Let's hope that's right!

Leyland's results on appraisal while not good were an improvement.

Operating losses of Land Rover-Leyland's commercial vehicle operations were cut from £66m in 1983 to £49m last year, BL discloses in its annual report. Leyland Group lost £61m in 1984 compared with a £70m loss in 1983 despite "a significant loss" at Leyland Bus.

The Land Rover Group, which includes Land Rover, Range Rover and Freight Rover, turned a E14m loss in 1983 to a £2m profit in 1984.

On the components scene, the dominating influence is the decline in the UK's truck making activities. Guest Keen and Nettlefold in its 1984 annual report says that, with increasing vehicle imports, sales of propeller shafts were lower. Sales on components to the four-wheel-drive and lightvan sectors remained at a low level as a result of the fall in UK output. GKN has stopped making truck wheels on the grounds of unprofitability.

Fortunately — or wisely — GKN has been expanding its overseas interests. Commercial vehicle axle sales to the USA have increased and "negotiations are at an advanced stage for the supply of Laycock overdrives for vans,"

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Locations: Glasgow

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