Parcel delivery firm DX Group PLC (LON:DX.) shares jumped in early trading Tuesday after full-year losses came in lower than expected as effects from the firm’s turnaround plan began to impact its finances.
The company reported an underlying (EBITDA) earnings loss for the year of £4.9mln, down from a £7.2mln profit last year but smaller than market expectations, while revenues were slightly ahead of market expectations at £299.5mln, up from £291.9mln previously.
DX’s net debt also dropped significantly over the 12 months to £1.1mln from £19.1mln, ahead of market expectations.
Ron Series, executive chairman of DX, said the company’s performance was “slightly ahead of market expectations” with revenues modestly ahead and underlying losses lower than anticipated, which he said reflected the initial benefits of the group’s turnaround plan and growth in its logistics business.
He added that the group expected more benefits of the initiatives to come through in the new financial year, with trading at the start of the year “encouraging”.
The firm launched a turnaround plan last year after various issues including legal disputes, a police investigation, a shortage of qualified drivers and difficulties at one of its sites caused a £82.7mln profit to almost completely flip to a £82.3mln loss.
As a result of the issues, the firm implemented a set of initiatives to restore the company finances, including a new management team and a reorganisation into two divisions, DX Freight and DX Express.
In a note to clients, City broker finnCap said that the results showed “encouraging signs” that the business and financial improvements had started to come through, although they were still forecasting a breakeven pre-tax profit for the 2019 financial year.
“We reiterate our view that the main issues DX faces are readily fixable by the new, highly experienced management team and there is, therefore, the prospect of significant share price upside”, the broker added, reiterating their target price of 18p on the stock.
Shares were up 6.7% at 10.1p.