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Profit improvement plan and tough decisions help operator make it back into profit
Bibby bounces back By Hayley Pink
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Bibby Distribution’s turnaround strategy has resulted in the MT Top 100 operator moving back into the black after a recent tough period. In the year to 31 December 2016, the firm made an operating profit of £2.3m, compared with an operating loss of £4.3m in 2015. This included an exceptional gain of £2.5m relating to a legal settlement regarding a historic contract. Without this, the company would have reported an operating loss of £211,000. Although turnover fell 12% to £187m in the period (2015: £213m), pre-tax profit was up 67% at £1.6m (2015: £4.9m loss). Bibby credited the bounce back on a profit improvement plan that looked at four key areas: organisational rightsizing; procurement; commercial review; and transport optimisation.
Chief financial officer Richard Morson said: “The improvement plan has been about reducing the fixed cost base of the business and making it more variable to revenue.” Some tough decisions were made to achieve this, he told MT, including a reduction in headcount across back office functions, as well as a review of its property portfolio.
“Over the past 12 months there’s been a move from expensive properties, which are a fixed cost, to more costeffective properties in better geographic locations,” said Morson. This included the opening of the 280,000ft2 G-Park facility in Wakefield last year, its Fusion hub in Bury and a second Max Park warehouse in Corby.
“Having the right facilities in the right place at the right cost means we can competitively win business, which is great,” said Morson. A commercial review of the company’s historical contracts was also undertaken to ensure they were still profitable with rate increases secured or business exited if in a loss-making position. “It’s about the quality of earnings now,” said Morson. “These are much better than 18 months ago as some of them were legacy contracts and not challenged.” The company’s 90 sites are now under one transport management system, enabling Bibby to identify and sell spare capacity on the network. Microlise telematics have been rolled out across the company’s 2,300 trucks and trailers, while recruiting a team of national driver trainers has seen an improvement in drivers’ performances.
Select committee slams delivery firms over workers’ status Delivery companies such as Hermes that use self-employed drivers need to change their business models, according to a report by the Work and Pensions Committee. The abridged report into the so-called gig economy calls for self-employed workers to be reclassified as “workers” to ensure their rights to basic employment benefits such as holiday and sick pay.
The report is based on findings from the committee’s inquiry into the gig economy, which was curtailed when the general election was called. It heard from companies including Uber, Amazon, Hermes and Deliveroo, as well as the drivers who work with them. The report condemned “the apparent freedom companies enjoy to deny workers the rights that come with
employee or worker status”. It called for a change in employment law to give self-employed gig economy workers greater protection. It said: “An assumption of the employment status of “worker” by default, rather than “selfemployed” by default, would protect both those workers and the public purse and would put the onus on companies to provide basic safety net stand-
ards of rights and benefits to their workers.” The findings dismissed the argument that flexible employment can only be delivered via self-employment as “a fiction”. “Profit, not flexibility is the motive for using self-employed labour in these cases,” it said. The report came as the GMB launched legal action against Hermes over the employment status of its workers.
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