Amidst geopolitical tensions and economic pressures, Pall-Ex made a strategic decision to close its Polish operations, leading to significant financial implications. This decision was influenced by the ongoing conflict following Russia’s invasion of Ukraine, which resulted in unfavourable trading conditions. Despite these challenges, Pall-Ex reported an overall increase in revenue, showcasing resilience in a contracting market. The group’s focus on operational efficiency and market share growth underpins their forward-looking strategy. Future projections remain positive with ongoing international network growth.
The geopolitical landscape and escalating conflict following Russia’s invasion of Ukraine exerted substantial pressures on businesses operating in affected regions. Pall-Ex’s decision to shutter its network in Poland was a direct response to these challenges. The closure resulted in the group incurring a loss exceeding £3 million last year. However, the company viewed this move as a necessary strategic adjustment, given the poor trading conditions influenced by local economic distresses and a soaring inflation rate between 15% to 20% in Poland.
In the face of these adversities, Pall-Ex demonstrated notable resilience. Financial results indicated a turnover increase to £141.2 million from £137 million in the previous year. The revenue jump by £4.1 million was achieved despite a challenging market climate marked by economic contraction and unprecedented inflation. This growth was attributed to boosting efficiencies across its divisions, allowing Pall-Ex to maintain its competitive edge and increase market share.
Pall-Ex UK, the entity primarily responsible for pallet and haulage services within the group, reported outstanding performance improvements. The EBITDA for Pall-Ex UK rose to £2.6 million, £0.3 million higher than the previous year’s figure. The improvement was credited to the robust growth in the transport division, improved corporate margins, and lower caretaker costs, which collectively fortified the group’s profitability in a demanding industry context.
Nevertheless, an exceptional charge of £3 million attributed to investment losses and loans due to its Polish franchisee and subsidiary firm Pall-Ex 24 Sp. Zoo entering bankruptcy, presented a financial setback. The group subsequently recorded a pre-tax loss amounting to £3.4 million. Further, a £0.4 million impairment related to loans issued post-closure was anticipated for the upcoming fiscal year.
Barry Byers, Pall-Ex’s MD for UK business units, reflected on a year of growth amidst closures, noting nearly doubled underlying EBITDA profits—excluding exceptional items—as the industry’s best improvement. Byers praised the continued profitability enhancements seen in Fortec, alongside the double-digit growth in their international operations in Romania and Italy.
The closure of the Polish branch was cited as a strategic choice resulting from adverse regional trading conditions catalysed by the Ukrainian conflict. Byers highlighted Pall-Ex’s commitment to enhancing service quality in the UK market, which has enabled gains in market share even as broad sector volumes declined. The group’s strengthened focus on commercial resources and training for shareholders have underpinned this success.
Pall-Ex remains optimistic about future growth, leveraging strategic decisions and operational improvements to navigate industry challenges.
