AG Barr deal puts fizz into Stobart's profits

The firm, whose Eddie Stobart lorries are a familiar sight on the UK's roads, achieved its latest contract boost with a 7m a year deal to provide Irn-Bru owner AG Barr with transport and warehousing.

The firm said volumes have been also been boosted by recent contracts with Tesco, Unilever and Nestle and the launch of rail services such as the distribution from Valencia to the UK of temperature-controlled fresh produce.

While volumes in the Eddie Stobart business have been volatile, the company said trading in the first six months of its financial year met expectations. It expects further growth in the second half due to the recent contract wins.

Analysts at Investec Securities estimate the company will post pre-tax profits of 36.5m for the year to February 28, up from 28.6m a year earlier. The company reported half-year underlying profits of 12.4m last year.

Stobart, which has operations covering road, rail, ports and air, has weathered the economic storm because two-thirds of its workload involves food and drink, where business volumes have been resilient.

Analysts also believe its pay-as-you-go business model has enabled the Carlisle-based business to retain existing customers. The company has a fleet of 1,600 trucks and revealed in May that its vehicles were 83.5 per cent used during the year to February.

As well as contract wins, the company has focused on cost efficiencies following recent acquisitions, such as the addition of Innovate Logistics, which gave Stobart its first chilled service offering.

Stobart has boosted its air capability with the purchase of Southend airport. A railway station at the airport is due to be completed by the end of this year, resulting in a direct 49-minute link to central London.