Rigorous Budgeting Delivers Profit Rise For Malcolm Group Despite Drop in Turnover

The Malcolm Group delivered an increase in pre-tax profit through 2023 despite a dip in turnover, writes Carol Millett, thanks to strict fiscal management.

Reporting its results for the year to 31 January 2024, the company revealed that group turnover had dipped to £242.8m (2022: £257m). However, despite this reduction in revenue, pre-tax profit edged its way up to £14.8m (2022: £12.4m).

In the review of the business The Malcolm Group said that during 2023/24 turnover in both its logistics and construction services and waste management divisions had fallen due to ‘well documented difficult trading conditions facing the UK economy’, which had resulted in a fall in domestic demand during the year.

The report added that a fall in fuel costs and ‘tight control of the company’s overheads’ had helped boost operating profit to £20.8m (2022: £17.3m)

Turning to its logistics sector, the report said activity levels in its logistics division were lower than the previous year, largely due to lower demand in the sector.

It added: “Nevertheless, with tight control over our cost base, the division recorded an improvement in operating performance during the year, resulting in a rise in pre-tax profit.”

Despite several new contract wins in construction services, activity levels were also lower than the prior year, the review revealed, pointing to supply chain inflation and increased energy costs, which hit operating margins.

It added: “But despite these challenges, the construction services divisions’ overall performance was slightly ahead of the prior year.”

During the year the group added £27.4m of capital expenditure and acquired Paisley-based leasing company Brookfield Securities for £9m.

Turning to the current financial year the review said that in the first six months of the new financial year, activity levels in logistics were “slightly ahead” of the previous year but added that operating performance is marginally down due to “highly competitive market conditions in the UK logistics sector”.

Meanwhile its construction services has seen both activity levels and operating profit in the first half of 2024 ‘slightly ahead’ compared to the same period in the previous year.

In addition, in August 2024 the group continued on the acquisition trail with the purchase of warehousing business Malcolm Properties (Holdings) for £52.9m.

The review concluded: “With net cash at the 31 January 2024 of £51.9m, compared to net cash of £48.4m in the prior year and committed bank facilities in place until August 2029, the group remains well positioned to take advantage of new business development opportunities, despite the headwinds facing the UK economy.”