A famous business that was born of one of the country’s oldest companies has seen profits and turnover diminish in the wake of the pandemic.
An expected dip in fortunes has snowballed into massive losses for part of one of the UK’s largest logistics companies that is now under threat, with the axe hanging over 270 staff.
It is no surprise that delivery and courier companies saw their revenues drop after the pandemic, but conditions have been exacerbated by rising costs of doing business and decreased e-commerce spend.
Logistics giant Menzies Distribution, parent company of the at-risk Menzies Parcels, swung to a loss of £1.3m from an £11.1m profit the year before, its latest available accounts show. Despite a £28.1m decrease, it still turned over £915.5m.
Menzies Parcels, which provides courier services in the north of Scotland and has 15 depots, showed its losses deepened from £738,000 to £3.2m over the same period, for the 52 weeks ended December 2022, with a £3.5m reduction in turnover to make £19.2m.
With an option for takeover available to one investor, it is unclear where its future lies, but Menzies said while it continues to diversify, it remains committed to its core market of newspapers and magazines.
The parent company revealed in July that Polish-based InPost had taken a 30% stake in the firm for £49.3m, with a three-year option for the Krakow firm to buy the remaining 70%.
The distribution company was previously part of John Menzies, which dates from 1833. Menzies Distribution was acquired by private equity investor Endless LLP in 2018 as part of the firm’s separation from John Menzies plc.
The Scottish company said in updating on a post-balance sheet event that on July 19, 2023, “InPost, Europe’s leading out-of-home delivery partner, became a new investor”.
The Edinburgh-based company said that “leveraging the group’s national network capability, the group will service all InPost’s UK lockers”.
Menzies said: “Whilst the group continues to successfully diversify into adjacent markets, the board’s priority continues to be the long-term sustainability of the end-to-end supply chain for news and magazines.
“This remains paramount and at the heart of everything we do.
“It is our successful diversification that secures a long-term, sustainable route to market for printed news and magazines."
The company also said the InPost agreement would "positively transform the company in the medium term".
“Delivery to InPost’s Automated Parcel Machines – where multiple parcels are delivered at the same time – will result in significantly lower levels of carbon monoxide emissions compared to traditional to-door deliveries,” said Menzies
InPost declined to comment. Menzies Distribution was also asked for comment.
The news came in the week that Scottish housebuilder Stewart Milne fell into administration leaving potential homeowners, staff and suppliers wondering what next.
Business editor Ian McConnell described “a peculiar feature of the Stewart Milne collapse”.
“The collapse of Stewart Milne Group, even with the fast-mounting evidence that the surge in UK interest rates is taking its toll on the housebuilding sector, came as a bolt from the blue.”
Kristy Dorsey writes in her Business Voices column that shipping attacks threaten to rekindle a surge in shop prices.
“The extra (shipping) time also leads to extra costs in the form of bigger fuel and salary bills.”
Elsewhere this week, deputy business editor Scott Wright asks: “Does NatWest Group, the state-backed owner of Royal Bank of Scotland, have an incurable addiction to shooting itself in the foot?”
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