JOHN G Russell, the haulage heavyweight, is showing its faith in the prospects for retailers with a multi-million pound investment in a new rail distribution facility in England after achieving strong growth in profits.
The latest accounts for the Hillington-based firm show it made £2.9 million pre tax profit in the year to 31 March compared with £2.6m in the preceding year.
Finance director Ken MacLeod noted the growth in earnings reflected a strong performance by the core distribution and bulk transport operations in the key food and drink market. The company, which provides services such as transporting whisky casks, said new business wins supplemented strong organic growth.
Owned by the Russell family, the firm does lots of work with supermarkets. Mr MacLeod said the retail market appeared to be steady with no sign that volumes could drop.
He noted that John G Russell is investing around £3m in developing a rail terminal in the Midlands of England, which it will operate for Sainsbury’s. The company beat off stiff completion to win the contract for the terminal, Directors expect it will provide a long term source of business.
Much distribution work is on done on short term contracts.
John G Russell was disappointed to lose some higher margin work labelling whisky bottles during the year to March. Mr MacLeod said the clients concerned moved the work to lower cost bases in central Europe, close to end markets in countries such as Poland and Russia.
The company has scaled back activity at a rail terminal it established in Essex following disruption to Channel Tunnel traffic amid the immigration crisis.
However, Mr MacLeod said: “We are still winning new business.”
He said John G Russell is working on a range of initiatives to win more work on which it could achieve higher margins than it does on standard haulage work.
The company’s profitability was boosted by a £150,000 drop in bank interest charges in the latest year, to £368,000, from £520,000.
In the accounts Mr MacLeod noted the growth in profits also reflected “further recovery from now discontinued operations”.
John G Russell was hit hard when its former Icetech freezer business fell into administration in April 2013. This came five months after Icetech’s biggest customer, Comet, foundered dealing a body blow to the business.
The group had spent eight years trying to revitalise the former Norfrost business, which it saved from collapse in 2005.
The Norfrost name and Icetech's equipment and designs were subsequently bought from liquidators to the business by Ebac in a seven-figure deal. Ebac sells Norfrost-branded freezers from County Durham.
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