DX deliveries recover after drop of a third
Delivery group DX saw activity drop by a third in the immediate wake of the UK lockdown over the coronavirus pandemic.
The group, which has two DX Freight sites employing 500 – including its main hub – in Willenhall and a DX Courier site at Bloomfield Park Industrial Park, Tipton, provides parcel freight, secure, courier and logistics services.
It said that after the initial 33 per cent reduction, which varied across the different services, more recently activity levels had shown improvement and management had also re-allocated resources, where appropriate, towards the demand for more business-to-customer deliveries and other initiatives.
Both company divisions – DX Express and DX Freight – are designated as essential service providers and have continued to operate during the lockdown with delivery procedures modified in line with the Public Health England guidelines to ensure social distancing.
Trading between March 3, when the group's interim results were issued, and March 21, just before the lockdown measures, was in line with management's expectations.
The board expects the reduction since then to significantly impact results for the current financial year to June 27, but with the duration and extent of the necessary measures to manage the coronavirus crisis currently unknown, it is difficult to predict the full impact of the coronavirus crisis on the business.
Actions to conserve cash, reduce costs, and manage the group through the crisis as prudently as possible are being taken. These measures will result in ongoing cost savings of approximately £21m in the final quarter of the financial year.
As operations return to more normal levels, these costs will be re-introduced in a managed, phased process. Approximately £10m of cash payments due to date and to be paid in the balance of the final quarter, have been deferred for up to 12 months.
The group, which has its headquarters in Berkshire and employs 3,000 staff, has a £20 million invoice discount facility available to it. Based on the current cash position, mitigating actions taken, and the forecast cash requirements, which take into account the current reduced level of activity, management believes that the company has a satisfactory level of headroom through this period of disruption to trading. In addition, DX's funding bank remains supportive.
The actions taken include reducing the amount of temporary labour and spot hire vehicles used across the group, and furloughing employees from those areas that are experiencing a reduced level of business. Other measures are in place, including utilising government assistance programmes, HMRC initiatives and payment holidays with vehicle providers.
All board directors and members of the senior management team have agreed to a reduction of 20 per cent in salaries and fees with effect from the start of May.
Chairman Ronald Series said: "Our top priority remains the welfare of our staff and customers, and we would like to thank all our staff for their tremendous response during this difficult time.
"While the coronavirus crisis has impacted the business, we believe that the group has sufficient financial capacity, and the operational expertise and management to weather this disruption and the ongoing uncertainty. We have taken swift and decisive action, and have implemented sensible measures to conserve cash and reduce costs to support the group's position.
"We remain very well-positioned to continue to support all our customers and to contribute to the important services provided to Her Majesty's Government and to the National Health Service."
