Troubled haulage firm Eddie Stobart Logistics has warned that annual profits will be “significantly below” expectations after a poor first half of the year.
The distributor said that “adverse performance” combined with an ambitious budget, as well as delays on a major project, cut into the company’s earnings.
On the back of the profit warning, Eddie Stobart said its leadership team has started a “wide-ranging review” into its operations and financial performance.
Eddie Stobart said it expects revenue for the six months to May 31 to be around £450 million and underlying earnings to be between £10-11 million for period.
The trucking group made the announcement in a delayed update, after the company admitted a £2 million accounting error which saw its shares suspended at 70p last month. It said its shares remain suspended.
DBAY, which owns 10% of the firm, has put forward an “expression of interest” to take full control and the possible suitors now have until October 7 to table a bid or walk away.
In Monday’s update, Eddie Stobart said its management team is prioritising cash generation and has already taken action to “improve cash collection” in the business.
Eddie Stobart said the fall in earnings is weighing down on its balance sheet, meaning it is relying more on its available debt facilities, which saw debt increase over the half-year.
The warning by the firm is also another frustration for embattled fund manager Neil Woodford, whose fund owns 23% of the business.