Sales Rise at Bibby Line Group

Bibby Line Group  //  12th June 2015

Liverpool headquartered Bibby Line Group (“the Group”) increased revenues eight per cent to a record £1,715m (2013: £1,592m) in the year to 31st December 2014.

The diversified Group said strong sales and profits growth in its offshore and marine services divisions had helped to offset weaker performance in others, notably its convenience retail business.

Bibby Offshore, which provides sub-sea services to the oil and gas industry, increased sales 46 per cent to £383.6m (2013: £263.5m) thanks to new vessels being chartered and high utilisation rates of its existing fleet of dive support vessels, construction support vessels and sub-sea remotely operated vehicles. Profit before tax at the business, which has a leading position in the UK North Sea as well as a growing international presence, increased 34 per cent to £52.3m (2013: £39.1m). Despite the strong performance, the Group cautioned that reduced oil prices were creating more challenging market conditions in the current year.

Similarly, the Group’s marine division – whose services span ship ownership, chartering, management, crewing, training and hydrographic surveying – achieved a 29 per cent increase in sales to £105.4m (2013: £81.4m) and a near trebling of profit before tax to £10.0m (2013: £3.4m). This, it said, was predominantly due to its Bibby Maritime subsidiary, where high utilisation rates of its floating accommodation vessels (Coastels) in Europe and Australia had led to record results.

Elsewhere, the Group’s retail division, which includes Costcutter Supermarkets Group (CSG) – the convenience retail management business – saw total sales fall marginally to £789.6m (2013: £806.7m) – predominantly a result of the sale of its Rhythm & Booze off-licence stores part way through the year and a reduction in volumes due to supply chain issues during the year.

The business, which has now grown to over 2,600 member stores in the UK & Channel Islands under the Costcutter, Mace, kwiksave and Supershop fascias, also saw losses before tax widen to £34.1m (2013:  £4.2m loss).  This, it said, reflected costs associated with the transition to its new supply agreement with Palmer & Harvey McLane Limited (P&H), which were predominately expensed through the profit and loss account. The business said profitability had been affected by significant long term investments incurred including creation of the ‘Independent’ brand, setting up the people, processes and systems for the new business and increased operational costs during the transition.

The disposal of Rhythm & Booze in the year also adversely impacted the trading result of the division due to the closure costs incurred.

Whilst the Group acknowledged challenges resulting from the transition of its supply agreement, it said improved  products, availability and pricing were now starting to really benefit its members, which it expects to translate into a recovery in trading during the year ahead and over the long-term. The costs required to deliver these improvements had already been fully funded by the Group holding company.

The Group’s financial services business, which provides invoice finance, asset-based finance and cash flow funding solutions to small and medium-sized businesses, grew its debts factored by 3.2 per cent to £8.6bn in 2014, with funds advanced to over 8,900 clients of £682m by the year end. Due to pressure on margins, however, revenue growth in constant currencies was 1.8 per cent. Investment in the business’ new operating platform and further improvements to its IT infrastructure meanwhile led to a reduction in profit before tax to £25.8m (2013: £32.4m).

Bibby Distribution, the Group’s logistics and warehousing services division, delivered revenues in line with the previous year of £252m (2013: £252m), as several contract losses were offset by new contract wins, notably with Netto in the UK for storage and distribution services, new operations in Poland for Kellogg’s, the opening of a third consolidation centre for Morrisons and contract renewals with key customers including Unilever, Mondelez (Cadbury), Honda and SCA. The business, which operates from 90 locations with more than 2,000 staff and over 2,500 trucks and trailers, said profitability had however declined due to delayed cost savings from a new transport management system, recording a loss before tax of £3.6m (2013: £4.6m profit before tax). This, it said, would drive further operational efficiencies and improved customer service levels in the years ahead.

Overall, the Group generated profit before tax of £44m (2013: £66m) and increased its capital investment across its businesses 18 per cent to £52m (2013: £44m) during the year.

Commenting on the Group’s performance, Sir Michael Bibby, Managing Director of Bibby Line Group, said: “Some outstanding performances helped the Group deliver record sales last year, despite challenging conditions in some of our business areas. The benefits of having a diversified group were clear as record profitability in some areas helped offset losses incurred elsewhere allowing us to take a long term view to invest to grow shareholder value.”

He added: “As we look ahead, continuing competitive pressure in our key markets, combined with geopolitical risks in many parts of the world and slowing growth in some of its largest economies, creates an uncertain backdrop.

“Our focus therefore remains on delivering a diversified portfolio of differentiated and market-leading services, while improving productivity and consolidating our position in core markets, as we adapt to the changing external environment.  It is this approach which has continued to provide the foundation for success for more than 200 years.”

Bibby Line Group, which employs 6,700 people, also continued its commitment to charities and good causes. During the year, over £1m was donated to more than 450 charities around the world, including £500,000 under its ‘Giving Something Back’ employee fundraising programme. Since the company’s bicentenary in 2007, the initiative has raised £7.9m for over 1,000 charities.

The Group climbed six places in this year’s The Sunday Times HSBC Top Track 100 league table of Britain’s largest private companies (26th).

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