Distribution company Connect Group has reported a 4.8% fall in pre-tax profits in its interim results.
The group posted a pre-tax profit of £23.3m for the six months to 28 February 2017, a £1.2m drop on the same period in 2016. Revenue is also down 0.6% to £911.8m.
But net debt decreased £20m to £149.9m, with the company expecting it to fall further once the £64.4m sale of its education and care supplier division is ratified by the Competition & Markets Authority.
Connect said the sale would enable it to focus on its news & media and parcel freight divisions.
“In line with our plans to focus the group’s investment on the two larger divisions, the proposed sale of education & care is an important milestone in our strategy,” said Connect Group chief executive Mark Cashmore.
“The resilience of news & media and revenue growth in Tuffnells has underpinned our overall performance, allowing for continued investments to drive growth opportunities.”
Revenue in its news & media division, which includes the UK’s largest news wholesaling business Smith News, fell by £24.2m to £706.7m.
News distribution sales dropped by £25.2m to £692.5m over the period, which the company said reflected “the long-term trend in printed media”.
Its ‘Pass My Parcel’ delivery service with Amazon also achieved a “lower than expected” increase in volume from 270,000 units to 380,000 units, Connect said. It attributed the slow growth to weaker than predicted deliveries, delays to securing contracts for new services, and lower initial volumes from new clients.
However, revenue rose £15m to £118.5m in its book distribution division, which was driven by an 18% and 27% increase in sales at UK wholesale and online independent book shop Wordery respectively.
Connect said the installation of an automated ‘pick and pack’ machinery in the second half of the year would provide greater capacity, and help to lessen the impact of the national living wage by reducing the cost of processing orders.
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