October 2, 2018 / 6:42 AM / 2 months ago

DX Group results better than expected as turnaround plan pays off

(Reuters) - Mail delivery firm DX Group (DXDX.L) reported better-than-expected full-year results on Tuesday, as its turnaround plan made headway and it saw growth in its logistics division.

Shares of DX Group climbed 6.7 percent in early trade, adding to a 9 percent gain this year.

DX Group - now reorganised into two divisions, DX Freight and DX Express - reported earnings before interest, tax, depreciation, amortisation, exceptional items (EBITDA) loss of 4.9 million pounds. The loss was smaller than market expectations.

The company reported a profit of 7.2 million pounds a year earlier.

“This year has been one of significant change for DX. The company is now on the road to recovery, as our turnaround initiatives start to gain traction. The group’s performance is slightly ahead of market expectations...” Chairman Ron Series said in statement.

Revenue rose to 299.5 million pounds in the year ended June, from 291.9 million pounds and was slightly ahead of market expectations, the company said.

“Results show encouraging signs that business and financial improvements have started to come through ... 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,” finnCap analysts said.

DX Group is one of several big operators in the crowded parcels market, where Amazon.com (AMZN.O) has gained dominance by starting its own deliveries.

The British company has set a turnaround plan in motion, largely due to its struggling freight business, and hopes to achieve profitable growth within three years.

The strategy included a change in leadership style and operational strategy. The firm’s chief executive and finance director stepped down last year and DX Group separated its operations into courier and freight divisions.

Last year, activist investor Gatemore Capital Management, DX Group’s largest shareholder, opposed the company’s plan to buy the logistics arm of John Menzies (MNZS.L). The deal was subsequently called off after months of fraught negotiations.

Reporting by Noor Zainab Hussain in Bengaluru; Editing by Amrutha Gayathri

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