aFfiffimmcemil MMT by George Malcolm
Page 79
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DG's reliable arometer
E FINANCIAL results and nuel report of Transport velopment Group are ,ariably eagerly awaited by :City and the road transport lustry.
rhis is not just because the ;ults from TDG provide a rometer for the haulagelustry (or at least the better.' part of it) but because the port invariably gives the best :ate of the nation" comments out haulage. Any company it can increase its turnover by per cent and its pre-tax profits 29 per cent in the current -nate must be worth listening
)verall turnover at TDG in 32 was £347.8m compared th £275.7m in 1981. Profit fore tax was E23.6m (1981 — 3.3m). Road haulage turnover is E198.2m (1981 — £161.2m) d profit before tax was £11.6m 1981 it was £9.6m).
n spite of diversification, ulage remains the principal mey-earner for TDG, which is parent of some 150 mpanies trading in the UK, rope, North America and istralia that are engaged in transport, warehousing, itribution, cold storage, export cking, industrial removals, int hire, exhibitions and the inufacture of steel nforcement.
Of the total turnover, 57 per nt came from road haulage 3.5 per cent in 1981). Storage ovided 12.4 per cent (14 per nt in 1981), plant hire and ler services 6.5 per cent (7.8 r cent) and concrete inforcement and exhibitions .1 per cent (19.7 per cent). In ofit terms, road haulage ntributed 49.3 per cent (52.7 cent), storage 35.3 per cent 5.3 per cent), plant hire and her transport services 4.9 per nt (6.2 per cent) and inforcement and exhibition .5 per cent (4.8 per cent). Note that the biggest percentage increase in profits comes from the last item listed. It could tend to obscure the fact that the haulage performance in 1982 improved by £2m on the 1981 levels.
It is also noteworthy that, overall, while the turnover of the company's UK operations went up by £20m and profits by close on Om, the overall contribution of UK operations, in percentage terms, diminished.
The UK contribution (turnover) was 61 per cent with TDG's European, Australian and North American operations combined contributing 39 per cent. This compared with 69.4 per cent and 30.6 per cent respectively in the previous year.
The same pattern applied with profits, the UK contributing 58.7 per cent against 41.3 per cent compared with 60.6 per cent and 39.4 per cent in 1981.
What all this reveals is that TDG is steadily, but surely, decreasing its dependence first on its haulage activities and secondly on its UK operations. It has, of course, been doing so for some years but in a way it marks a second and third phase in a diversification programme which started with TDG diversifying into different types of haulage; a recipe for success imitated by others. It was, for example, followed some ten years or so ago by BRS but not until relatively recently by other components of the NFC.
But what did Sir James Duncan, the group's chairman and chief executive, say about 1982 and what is his view of the future?
In his opening remarks he said: "To make plans 'in case anything turned up' was a characteristic of Mr Micawber. It was widely shared in 1982. But, despite encouraging signs from time to time, very little has turned up. Certainly not the economy. For most companies it has been an aggressive, hard slog to secure a modest increase in profits.
"That there is an increase is in considerable measure due to the hard work of the previous year in cutting costs and increasing efficiency. Profits are being made in the most adverse conditions. Among Group executives no Micabers remain, but, as things do turn up, profitability will rapidly increase."
Of haulage in the United Kingdom, he had this to say: "For road hauliers, the year started with appalling weather, the worst in living memory for some areas. Vehicle movements were hampered by treacherous roads, by freezing fuel and by associated mechanical faults. Revenue fell and maintenance costs inevitably rose sharply during the period.
"As the year progressed demand increased and this gave rise to some optimism. Neither • the demand nor the optimism were long sustained. There has been some rise in traffic volume, but more is needed if laid-up vehicles are to be restored to service and filled with traffic."
And here's the truism with which few hauliers will disagree: "Until that position is reached rates will not harden nor the haulier be able to secure the return on his investment which has for so long been lacking."
The need for flexibility is underlined in his next comments. Rightly, he says that the fortunes of haulage companies are, in great measure, tied to those of their major customers. "Movements of steel and heavy industrial products continued to decline and companies dependent on such industries suffered. The decline was particularly marked in Scotland, and towards the end of the year, Strathclyde Transport Services was merged with McKelvie and Co. (Transport). Tanker operations associated with the petrochemical industry also had a hard time." What happens when you adopt flexible attitudes? He provides an example. In the North of England, Econofreight Transport which moved away from its traditional steel traffic, now specialises in heavy haulage. It made considerable progress, he reports, two further hydraulic trailer units being added to its extensive range of specialised equipment. "The company has been very active and long term contract work has continued into the current year," he says.
Sir James points out that much change and development is taking place in the specialised field of distribution and there are many opportunities, he says, if operating companies are alert and adaptable.
In Europe, TDG companies transporting food and agricultural products prospered, but life was difficult for the heavy haulage and plant hire enterprises and, as in the UK, the depressed demand for chemical products affected the tank haulage companies.
On the 38-tonne vehicle issue he points out that substantially increased excise duty is payable on these heavier lorries and operators may need some persuading to invest in expensive new equipment at the present time when a fair proportion of their existing fleets stand idle.
So what of the future? Sir James confines his comments about the outlook for 1983 in the UK to: "Profits to date are ahead of the previous year, helped by the generally mild winter." That's non-committal but not unexpected. Who at the present time dares be over-confident? At least he's not forecasting doom and gloom.
As for overseas, he says: "The platform is mixed and the outlook more uncertain especially in the case of the North American reinforcement companies, but most executives remain optimistic." That, as they say, is at least something!