Eddie Stobart reveals earnings woes and accounting hit
It said current trading issues have been caused by slower-than-expected productivity in some units and a ‘problematic contract’.
Haulage firm Eddie Stobart Logistics has warned first-half earnings will be at the lower end of expectations and revealed a hit of around £2 million to last year’s results after an accounting error.
Shares in the group were 4% lower, having fallen by around 10% at one stage, on the earnings woes.
It said current trading issues have been caused by slower-than-expected productivity in its contract logistics and warehousing units, and exiting a “problematic contract” at the end of March.
On the accounting mistake, it said results for the year to November 30 2018 are likely to be restated after new chief finance officer Anoop Kang found problems in its accounting policies around leasing.
It is set to lower the 2017-18 underlying earnings by around £2 million, with the cumulative effect of the adjustment, dating back to 2017, reaching £11.5 million.
The group said the issue relates to the lease accounting on “four legacy sites”.
Further details will be revealed in its interim results on August 29.
Eddie Stobart, whose new finance boss Mr Kang took up the role in April, had previously reported annual underlying earnings of £55.3 million last year.
The group gave assurances that, despite the half-year trading knock, it still expects to be on track with full-year forecasts thanks to expectations for a stronger second half.
It said first half group revenues rose by 8% on a like-for-like basis after a number of contract wins.
Under-fire fund manager Neil Woodford owns 23% of Eddie Stobart through Woodford Investment Management, down from 25% after another round of disposals at the end of last week as his equity income fund remains suspended.
Eddie Stobart Logistics was spun out of Stobart Group in 2014.
It operates a network of more than 2,000 vehicles, 3,500 trailers and 24 distribution centres throughout UK and Europe.