Profit warning at DX

A wide ranging review of operations is underway at DX after it made a trading statement giving a profits warning. DX expected growth in its higher margin revenues has fallen through, impacting the business’s overall profitability due to the nature of its fixed costs.

DX had been integrating its five sites into one, part of its ‘OneDX programme’. This has also experienced some short term operational issues and resulted in temporary higher costs to the business as a whole.

The independent parcels company has said that challenging trading conditions are continuing and are putting pressure on pricing. While this was referred to in the November trading update this has further impacted DX. The recent trading update said that the business is still experiencing margin erosion due to ongoing changes in revenue mix.

The statement also said that while it has experienced ‘strong momentum’ and wins in the logistics business, it had not seen the same DX Secure volume growth that it did in 2016, that boosted the company’s overall revenues.

DX said in its trading statement: “In the light of these issues, the board has reviewed its expectations of the group’s performance and while material new contracts are now being implemented and the company’s pipeline of new business opportunities is robust, it now anticipates that profits for the year will be significantly below current market forecasts, with net debt consequently higher than expected.

“It has also taken the decision not to pay any dividends for the foreseeable future and has commenced a wide-ranging review of the company’s operations with a view to driving revenues and improving its financial performance.”
 
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