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Leading West Country haulier Gregory Distribution is predicting improved trading for 2007, but says "price pressure" will remain a challenge for the business. "We anticipate an improved trading environment for the current year [2007], although price pressure remains intense and the anticipated increase on [fuel] duty in October will further compound what is already a record high for the cost of diesel," chief executive John Gregory says. But while there are agreements in place with customers on  fuel costs, Gregory feels the frustration of not being able to pass on other operating costs.

"We're very strong on the supply side of our business," says Gregory, referring to the company's drive to fit all its vehicles with digital tachographs, wage increases and training initiatives. But he adds: "All of these things cost and we can't pass it on to our customers when we are already talking to them about fuel." Gregory says 2006 was a "difficult trading year", adding that the company's fall in pre-tax profit was also due to the fact that it didn't have the support of a property transaction that boosted results for 2005. Pre-tax profit for the Devon haulier dropped in the year to September 2006, to £2.1m from £3.0m in 2005.

Turnover fell by 17% to £73.6m in 2006 from £75.4m the year before, which the company attributes to "reduced volume in our milk-related transport activities and the exit from operations at our Keynsham depot". Gregory Distribution has a strategy to  invest further in the recycling arm of the business, and according to Gregory "anticipates further contract strategy in the forthcoming year". "Current trading conditions remain challenging, but improved margins remain the aim for 2007. We've been around for a long time and we're in it for the long haul," he concludes.