Group Overview
The weak economic environment experienced during 2010 has persisted into 2011 and this has continued to create a tough trading backdrop in the first half of 2011. The opportunities and challenges faced by each of our businesses in the UK, Ireland, France and Sweden are different but we are pleased that, in the context of current market conditions, the businesses are performing broadly in line with expectations for the first half.
Strategy Update
The Brakes Group continues to be focused on identifying opportunities to deliver sustainable long term growth in sales and profit. Over the past twelve months we have developed five year strategic plans for each of our geographies. The focus is on sales growth, development of new customer propositions, procurement and product engineering and continuous logistics improvement activity as well as specific network investments. We will also continue to seek out profitable opportunities to consolidate our markets, whether from geographic in-fills or geographic expansion.
UK
Of the four countries in which we operate, the UK market has been the most challenging in the first half of 2011. However, our market leading reputation with customers and dedicated base of employees is helping us to navigate these tough conditions. We remain committed to working with our customers to develop long term relationships and to building a market leading business for the long term. Our commitment to this is demonstrated by our investments in people, infrastructure and the network. Notably, in H1 2011, the first stage of our network strategy has begun with building work now started on our new regional distribution centre in Reading.
Brakes France
Like the UK economy, the French economy has seen a slowdown in consumer spending. Despite this, in H1 2011 sales growth was achieved in each of our three key business sectors: independent accounts, corporate accounts and the public sector. This is testament to the benefits and focus that the strategic review work, that took place last year, has reinforced, as well as the effort the French team has spent in implementing the initiatives.
Menigo (Sweden)
We are extremely pleased by the progress and development of Menigo since we acquired a stake in the business in April last year. This acquisition has demonstrated to us the benefits of leveraging shared expertise and experience in distribution, purchasing and product development across the UK, France and Sweden.
Corporate social and environmental responsibility (CSER)
We are committed to ensuring that our business develops in an environmentally sustainable and sociably responsible manner. Recognition of our work in this area was received in June 2011 when Brakes was awarded a Silver ranking in the Corporate Responsibility Index. This index is published by Business in the Community and is the UK’s leading voluntary benchmark of corporate responsibility. The activities that supported our placing in the index included an environmental championship structure that is embedded at regional and site level, training and audit programmes that drive continuous improvement, and waste reduction initiatives that include increased recycling initiatives and a “zero to landfill” vision.
Conclusion
The economic environment remains challenging across Europe with consumer confidence weak, persistent price inflation and a competitive trading market. There are no indications that this will improve in the short term. We remain committed to developing the business to support our customers in this difficult environment, and we are also focused on taking action to protect our performance. Our financial position is robust, the markets in which we operate have good long term growth trends and we have solid foundations to support investment for future growth.
