Sir Michael Bibby
Bibby Line has navigated a safe passage through 2009’s choppy waters, as Alex Turner reports
BIBBY Line Group’s global reach and diverse range of services and products has enabled it to continue to thrive, despite the worldwide recession.
This has enabled the Liverpool-based group to shrug off the pessimism surrounding the medium-term outlook for the UK economy and plan for growth in parts of the world where economies are in better shape.
Bibby Line Group’s chairman Simon Sherrard said: “While the United Kingdom appears to be moving out of recession, the level of government debt does not give rise to optimism for better times in the short term.
“We are, however, operating throughout the world and there are many markets where the glass is half-full as opposed to half-empty.”
Under the management of Sir Michael Bibby, who has led the family firm since taking over as chief executive from Mr Sherrard in 2000, the group has enjoyed stellar growth.
Bibby Line had just recorded a pre-tax profit of £5.4m on a turnover of £141m when he became the sixth generation of his family to head the group.
An aggressive growth strategy, which has combined acquisitions with organic growth, has seen it grow more than seven-fold in just 10 years.
Accounts lodged at Companies House show turnover increased by 5% to £1.09bn last year. Pre-tax profits slipped by 5% but remained very healthy at £21.8m.
Under the terms of a long-term incentive scheme, Sir Michael received a £2.7m bonus for his leadership of the 203-year-old firm.
Dividends of £2.17m were paid, with 88% of the group’s shares held by Sir Michael and his sister, Jennifer, and their immediate families.
While Bibby Line is a famous maritime name, the group’s wide range of interests means that shipping and related sectors account for only a minority of its annual turnover.
It has diversified from owning, operating and managing ships into logistics, financial services, retailing and much more. Today its interests range from woodland burials to deep-sea diving, and from corner shops to Transit vans, with canteens in the middle.
Sir Michael and his management team are positive about the future, although last year was frustrating for developing its future plans.
Sir Michael said: “2009 was a very challenging year for Bibby Line Group as we had the appetite to acquire other businesses and secure major new contracts but very few, of the many, opportunities we reviewed were concluded.
“I believe this was largely due to the uncertainty in the global economic outlook, which meant that when it came to the crunch most people shied away from taking big decisions such as selling their business or changing their key suppliers.
“With hindsight, this may prove to be a good thing for us. In many markets, we are still seeing asset prices and business values falling, while we have increased our cash, reduced our debt and completed our major capital programmes.”
He was satisfied with the performance of Bibby’s existing businesses with cause for optimism in most of its operations.
“The recession is providing opportunities in most areas in which we operate,” he added.
“Financial services has seen a large increase in new business as banks become more risk averse.
“Distribution is seeing a very strong pipeline of new enquiries as companies are forced to review their cost base and gain the financial benefits of contracting out their logistics requirements.
“Costcutter has seen continuing year-on-year growth as more independent shop owners seek to join fascia groups, consumers change their buying patterns and new premises are becoming available at reasonable cost as the retail sector struggles.
“Demand for our offshore services recovered to reasonable levels in the second half of 2009.
“However, the uncertainty as to future demand has increased while dry bulk shipping freight rates held up better than expected due to strong Chinese demand and late delivery of many new buildings.”
Bibby Line Group, he said, is in a strong position to deliver when the global economy returns to a period of sustained growth. Shareholders’ funds were £218.4m at December 31, while it had £52.6m in cash.
It has already made progress in 2010, with the announcement that it is to return to deep-sea cargo carrying, three years after it disposed of most of its former deep sea fleet. It has placed an order for a dry bulk vessel capable of carrying loads up to 57,000 deadweight tonnes – the first of what Bibby Line hopes will be a new worldwide fleet of bulk cargo ships ordered in the next year.
Sir Michael said: “All of our businesses responded well to the challenging economic conditions, while some excellent results were produced. The capability was increased within every business to deliver strong growth when the upturn arrives.
“We intend to continue to invest, not just in developing our existing successful services businesses, but also once again in cyclical businesses, such as shipping, as we see the recovery starting.”