Distributor Northamber has swung to a sizeable first-half loss after the rising cost of doing business hit its bottom line hard.
In a typically lugubrious interim statement, Northamber chairman David Phillips warned that the improvements it reported in November had "stalled" and that there is "little justification for optimism in the short term".
Separately, Northamber announced the retirement of managing director Henry Matthews after 30 years at the firm. General manager John Henry has been promoted to operations director.
For the six months to 31 December 2011, Northamber stumbled to an operating loss of £487,000 on revenue of £53.8m, compared with a profit of £75,000 on revenue of £67.7m a year earlier.
The Chessington-based distributor has spent the past year exiting low-margin areas of its business and the re-profiling led gross margin to improve by 80 basis points year on year.
However, due to fall in revenue, gross profit decreased (from £4.2m to £3.8m year on year) and rising costs associated with carriage costs and bad debts more than wiped out its bottom line. Distribution expenses rose four per cent to £2.3m, with the carriage cost component 14 per cent higher due to the hike in fuel prices and other charges. Administration expense rose by one per cent due partly to an increase in Northamber's provision for bad debts, which were 0.1 per cent of sales.
The dividend paid to shareholders halved to 0.3 pence per share.
Phillips said: "Confidence in and expectation of any considerable improvement in the whole economic background has, if anything, declined."
On a brighter note, allowing for the low-margin business it discontinued, Northamber's sales were up seven per cent year on year and the firm continues to re-profile its revenue mix.
Of the board changes, Phillips said: "With these changes, together with those made last year, I believe that the company is better placed to master the challenges and opportunities which undoubtedly confront ourselves and the economy."
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