Shares up as haulier returns to the black

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SHARES IN Dawsongroup, the lorry rental and dealership company, jumped 19 per cent yesterday as the company bounced back into the black.

The haulage company's performance closely mirrors wider trading conditions because it transports a large range of goods.

However, the profits leap is not a signal that conditions are improving. Most of Dawsongroup's business has been renting lorries for short periods.

Short rental periods are a sign of nervousness and an unwillingness by customers to commit themselves to longer contracts.

Fortunately for Dawsongroup, the profit margin on short-hire business is better than for longer-term business.

In addition, Dawsongroup is hiring out to more individual traders, who are less able to put pressure on prices than bigger customers.

Overall operating profit margins widened to 18.4 per cent from 11.6 per cent. Pre-tax profits were pounds 2m for the six months to 30 June, against losses of pounds 200,000.

The company has restored its interim dividend to 0.75p after passing last time. It added that it wants the total annual dividend to be covered two to three times by earnings per share.

Turnover nosed ahead to pounds 22m from pounds 20.7m. Dawsongroup said its utilisation rate on lorries for short and contract hire was better. But despite pounds 21m of expenditure of new vehicles, the fleet will be only slightly larger by the end of the year.

Earnings per share were 4.5p against losses last time of 0.5p. The shares closed up 17p at 109p.