Eddie Stobart Logistics PLC (LON:ESLE)’s pre-close update confirmed the company traded in-line with expectations in the first half and continues to do so going into the second half. H117 sales grew 13% to £287m with a modest expansion in operating margins despite a challenging economic and political backdrop. Integration of the iForce acquisition continues and management highlighted the potential for cost and revenue synergies.
In addition, ESL acquired 50% of Speedy Freight, a B2B express freight service provider. CEO Alex Laffey said he remains confident of meeting market expectations for the full year and once again highlighted E-commerce, Manufacturing, Industrial and Bulk as key end-markets for the group.
High growth, expanding margins, strong H2 ahead
ESL’s sales in the six months to 31 May 2017 were up 13% to c£287m while margins expanded year-on-year partly as a result of the Q2 exit of the loss-making Britvic contract (note, the Britvic exit also reduced y-o-y revenue growth). H2 is traditionally the stronger reporting period as it includes peak seasons for retail, consumer and e-commerce. H217 is likely to be especially strong driven by high continuing growth in e-commerce plus full period contributions from both iForce and Speedy Freight.
We are reassured by the trading statement and view our full year revenue growth forecast of 13.7% and operating margin expansion to 7.5% from 7.4% as consistent with management’s guidance.
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