Exel, the storage and delivery group, yesterday unveiled only a slight increase in first-half profits, as the ongoing downturn in the global economy subdued appetite for its airfreight services in America and Europe.
Pre-tax profits before goodwill and exceptionals rose 2.3 per cent to £67m in the six months to 30 June, reflecting a "tough" period in Exel's delivery business, John Allan, the company's chief executive, said.
While Europe and the US was sluggish, Exel achieved strong growth in its Asian business. Overall, turnover rose 7 per cent to £2.3bn. Exel's shares rose 18p to 678p.
Mr Allan said: "Due to the world's economic cycle, very few industries are showing much sign of revenue growth. The fact that we are is enormously encouraging."
The company, which handles delivery services and warehousing for companies such as Marks & Spencer and Wal-Mart, said it had benefited from companies importing increasing amounts of their goods from a wide range of countries.
Exel, which owns operations in 50 countries, said it was trying to capitalise on the trend by opening businesses in new locations. Earlier this year it launched operations in Indonesia and Pakistan.
Mr Allan said the trend had also boosted its warehousing arm, from companies that wanted to outsource not only the transportation but also storage of goods once they reached home markets in the UK and US.
Exel updated the market on its pension fund, ahead of the conclusion of a review in October. Mr Allan said the value of the £1.6bn defined-benefit fund had decreased, due to the slump in equity values, but that it retained a "slight surplus". However, reflecting the drop in the value of the assets, Exel would resume contributions to the fund next year, he added. Exel, which was formed in February 2000 when the airfreight company Ocean Group bought the trucking company NCF, raised its interim dividend to 7.9p. The company won new business worth £400m in the half.
"There is still some work to be done in European contract logistics and domestic US freight management, but performance to date confirms the group's confidence for the balance of 2003," Mr Allan said in a statement.
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