Arco announces return to profit and latest growth plans

TURNAROUND: Arco’s head office in Hull

By Rick Lyon, Co-Editor

Leading safety expert Arco has announced a return to operating profit, with financial results ahead of target, one year into its ‘Destination 2030’ transformation plan.

The Hull-based company’s annual results show a profit increase of £4.4m for the year ended June 30, 2024 (FY24). Excluding exceptional items, the business made a pre-tax profit of £1.3m, compared with a pre-tax loss of £3.1m in the previous year.

The turnaround in profit was achieved despite sales being six per cent lower, as the company focused on quality of earnings and gross profit margin. Arco achieved its highest gross profit margin in five years, at 23.9 per cent, and ended the year with a strong net cash position of £3.5m.

Guy Bruce, chief executive of Arco, said the results demonstrated the effectiveness of the transformation programme in enhancing profitability while driving improvements in areas such as customer service, choice, sustainability and business efficiency.

“One year into our Destination 2030 plan, we have delivered much of what we set out to do in the initial ‘fix the foundations’ phase, with financial results ahead of target,” he said.

“Arco today is a stronger and more disciplined business than it was a year ago, with improved margins, a healthier cash position and extended capabilities to serve customers effectively as we execute the next phase, ‘build for growth’.”

Guy said he was proud of the work done to execute the improvement plans with “determination and rigour” and in line with the company’s core purpose of keeping people safe at work.

Arco’s annual report for FY24 outlines how the company has improved customer experience through better service metrics and product availability, employed data-driven decisions to improve margins, and made more efficient use of capital, resulting in its stronger cash position.

Arco has also strengthened its supplier relationships, working with fewer suppliers, but more closely, to develop a proposition that is better suited to its customers’ needs.

The company’s commitment to corporate social responsibility has seen £38.5m of social value generated in FY24, with more than £4m generated in projects in Hull and East Yorkshire. Arco employees have supported numerous community and charity organisations with biodiversity, environmental and other projects, using the two paid volunteering days the business allows them to take each year.

Arco has also continued to focus on sustainability, investing significantly in renewable power, doubling sales of its ‘Responsible Choice’ product ranges and retaining its Gold award from EcoVadis, the world’s largest provider of business sustainability ratings, which places Arco in the top five per cent of businesses assessed.

In FY25, Arco is moving into the ‘build for growth’ phase of its transformation journey, in which it plans to double investment, enhance its customer value propositions, website and e-commerce capabilities, and introduce innovative new products with ‘category-defining’ sustainability credentials.

The company is planning further investment in its Arco Professional Safety Services business, introducing new facilities and training propositions to strengthen its market-leading position as a provider of joined-up safety solutions.

As well as investment in organic growth, Arco is seeking to grow through inorganic routes and is actively looking for businesses that would make suitable additions to the organisation.

Guy said: “Focus areas for potential acquisitions have been identified and we’re excited to explore opportunities that present a strong match to those criteria.”

Arco will soon begin work on the Arco Discovery Centre in Hull, which will showcase the company’s customer value proposition as experts in safety, including its wide range of products and services and its independently accredited product assurance laboratory.

Guy said: “We are excited about the progress we will make towards long-term growth this year, and the continued development of an even stronger Arco business.

“While our business is in a strong position, we are mindful of the challenges ahead. The impact of the Government’s recent budget will undoubtedly put additional pressure on businesses, including ours.

 “As we move into the next phase of our strategy, we will do so in context of the changing economic environment, seizing opportunities to grow whilst maintaining financial resilience.”