Hull safety specialist Arco says it has returned to profit after its turnaround plan started to make progress.
The Hull-based safety products and services provider has issued unaudited results for the year ended June 30, which it says show a profit increase of £4.4m, having chalked up a pre-tax profit of £1.3m, compared with a pre-tax loss of £3.1m in its 2023 financials. It says the turnaround was achieved despite a 6% drop in sales, with the company focussing on quality of earnings and gross profit margin to achieve its highest gross profit margin in five years, at 23.9%.
Arco ended the year with a strong net cash position of £3.5m.
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Guy Bruce, chief executive of Arco, said the results demonstrated the effectiveness of its ‘Destination 2030’ transformation programme, which aims to boost profitability and improvements in areas including customer service, sustainability and business efficiency.
The firm said that during the 2024 financial year it improved customer experience through better service metrics and product availability, using data-driven decisions to improve margins. It also said it made more efficient use of capital, resulting in its stronger cash position. Arco said it has also strengthened its supplier relationships, working more closely with fewer suppliers.
The company’s saw £38.5m of social value generated in FY24, with more than £4m generated in projects in Hull and East Yorkshire. Arco employees also supported community and charity organisations with biodiversity, environmental and other projects, using the two paid volunteering days the business allows them to take each year.
Looking ahead, Mr Guy said Arco is moving into its ‘Build for Growth’ phase, in which it plans to double investment and enhance its customer value propositions, website and e-commerce capabilities. Work will also soon start on the Arco Discovery Centre in Hull, which will showcase the company’s strengths, alongside its range of products and services and its product assurance laboratory.
The company is planning further investment in its Arco Professional Safety Services business, while exploring potential acquisitions of businesses that would make suitable additions.
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He said: “One year into our Destination 2030 plan, we have delivered much of what we set out to do in the initial ‘Fix the Foundations’ phase, with financial results ahead of target. Arco today is a stronger and more disciplined business than it was a year ago, with improved margins, a healthier cash position and extended capabilities to serve customers effectively as we execute the next phase, ‘Build for Growth’.
“Focus areas for potential acquisitions have been identified and we’re excited to explore opportunities that present a strong match to those criteria. We are excited about the progress we will make towards long-term growth this year, and the continued development of an even stronger Arco business."
He added: "While our business is in a strong position, we are mindful of the challenges ahead. The impact of the Government's recent budget will undoubtedly put additional pressure on businesses, including ours.
“As we move into the next phase of our strategy, we will do so in context of the changing economic environment, seizing opportunities to grow whilst maintaining financial resilience."