FT: Stobart wheels out biomass strategy24/10/2013
Andrew Tinkler, Stobart’s chief executive, said on Thursday that the group made famous by its fleet of green long-distance lorries would be focusing on the “two growth areas of biomass and airports”, under a simplification of the four-year growth plan it implemented in 2011.
Stobart had been seeking to diversify its revenue streams away from road haulage through acquisitions, which have included a property portfolio and a civil engineering business.
However, with more than 90 per cent of revenues still coming from transport, Iain Ferguson, the group’s new chairman, has announced a focus on businesses that are capable of delivering significant growth.
Presenting the company’s half-year results, he said his aim was to “build out the airport, build out the biomass, and make sure that they also grow organically”.
Mr Ferguson joined Stobart on October 1 after a litany of management and corporate governance problems earlier in 2013. In April, Avril Palmer-Baunack was ousted by a boardroom coup after only three months in the role.
Ms Palmer-Baunack’s appointment had been supported by Invesco Perpetual fund manager Neil Woodford, who held a 37 per cent stake in the company. But other shareholders opposed Ms Baunack’s attempts to sell off assets and focus solely on the haulage business.
Mr Ferguson said he also has Mr Woodford’s support, but emphasised that Stobart’s future growth would not be delivered by road alone. Stobart is on a “relentless quest for innovation”, he said.
Ben Whawell, finance director, forecast that investments in biomass, planes and trains – which are almost complete – would begin to pay off in coming years, contributing to increased revenues and “a lot more to profitability”. “In three to four years’ time, half our profits may come from biomass,” he said.
Biomass, which involves burning waste wood for energy, is already Stobart’s second largest contributor of revenues after transport. In the six months to August 31, biomass tonnage reached 345,000 – a 52 per cent rise on the same period last year.
Investment in air transport is also paying off. After acquiring Southend Airport in 2008 for £21m, the company has invested a total of £140m in the facility, and in the last half-year period passenger numbers rose 43 per cent to 528,000 – helping Stobart’s air division turn a loss into a small profit.
As a group, Stobart – which employs more than 1,000 staff – reported revenues of £330m for the six months to August 31, up from £247m in the same period last year.
Pre-tax profit fell slightly, to £10.4m, mainly due to high operating costs and the discontinuation of a business providing transport pallets for chilled goods.
Stobart shares rose 0.7 per cent to 130.5p on Thursday.