Christian Salvesen’s Tyre Plan Proves ‘Difficult’

Profits at Christian Salvesen fell 19 per cent, at least partly due to the higher than expected start-up costs encountered in its distribution deal with Goodyear Dunlop and Continental Tyre Group in the UK. The firm posted underlying pre-tax profits of £12.5 million for the year to March 31 and extended the UK transport division’s operating losses to £4.6 million for the year.

“Progress during the year was slower than hoped, due in part to a difficult start-up for our national tyre distribution partnership with Goodyear Dunlop. The unplanned start-up costs were a significant factor in the increased losses for the year. As part of the turnaround plan for our UK network business, we are investing in new systems to achieve rapid improvement in operational efficiency. For the longer term, we are investigating options that will require more fundamental infrastructure changes,” said the company reporting its full-year results.

“Revenues increased due to the launch of the national tyre distribution contracts for Goodyear Dunlop and Continental Tyre Group and [there was] some success with rate reviews. However, the unplanned start-up costs contributed significantly to the overall increase in losses. It was a frustrating start for what has proved to be a very exciting new development. The efficiency and cost benefits of sharing a single logistics platform dedicated to their sector are so compelling that rivals Goodyear Dunlop and Continental are happy for us to manage their logistics on a confidential basis for the benefit of both,” the statement continued.