Sales have held up above a pre-Covid high for Hull safety giant Arco as demand for PPE post-pandemic slacked.
The company has recorded sales of £307 million in its latest financial year, down 21 per cent from an exceptional £390 million it reported at the height of the outbreak. Operating profit was also significantly lower, almost 70 per cent from £18.4 million to £5.8 million, as the economic situation and inflationary pressures combined with supply chain volatility.
Arco has described the year to June 30, 2022, as a “challenging period” but emerged with a “healthy cash position” with £11.9 million on the books, even after an additional £3.75 million additional pension contribution. A re-basing had been predicted in last year’s results.
Read more: £30m funding deal to springboard Gravity's growth in active leisure locations
That had been a period dominated by the response to Covid-19. Arco had seen revenues of £320 million in the year that overlapped with the first lockdown, with sales of £282 million and £295 million achieved in the two previous years.
Thomas Martin, Arco chairman, said: “The financial year to June 2022 was characterised by geopolitical and macroeconomic uncertainty and this has continued into 2023.
“Arco’s brand strength remains high, driven by our long-standing reputation as experts in safety and our leadership in compliance and quality. We have nevertheless experienced challenges across our product distribution business, as supply chain volatility and structural limitations within our business impact profitability.
“However, ongoing investment in the safety services business has boosted performance in that division and the opening of the fifth specialist safety centre in Bracknell in November 2022 has expanded our reach further in the south of the UK and demonstrates strong continued momentum in this part of the business.”
New chief executive Guy Bruce joined the business in December, with a strategic review set to position the business for long-term growth, building on a £70 million investment, with the national distribution centre expansion and new head office, both in Hull.
Since the year-end the company has also invested in a workwear recycling start-up innovator, with a £100,000 capital push to take Stuff4Life to market. A gold medal accreditation has also been achieved from business sustainability ratings provider EcoVadis.
Supply chain volatility, increased costs of materials and manufacturing remain challenging, the company said, with the Fruit Market team “actively engaging with customers and suppliers to mitigate the impact of these factors”.
It is continuing to leverage recent investment in its core capabilities to deliver a market-leading integrated safety proposition, whilst “being cognisant of the need to adapt to a rapidly evolving health and safety sector and shifting customer requirements”.
A total of 1,600 people are employed by the fifth-generation family-owned business.
Mr Bruce, who is heading up the transition from family-owned and managed to purely family-owned, said: “We are confident that Arco has good fundamentals as well as a market-leading brand and we are now focused on identifying ways to enhance profitability, optimise our efficiency and increase market relevance across the entire group to position it for growth over the next few years. We will provide an update on our strategy and progress in the coming months.”
Read next:
Croda's sales top £2b as profits hit £500m for East Yorkshire smart science giant
Sewell sets out on employee ownership path as deal done for 25 per cent stake
Upbeat assessment of Smith & Nephew's performance as it awaits major planning decision
ABP outlines £2b investment as it eyes Net Zero by 2040 in new sustainability strategy
All your Humber business news in one place - bookmark it now
