Exel quits takeover trail and returns £240m to investors

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The Independent Online
Exel, the logistics group, is to return up to £240m to shareholders after strong financial results and a decision to slow down its spending on acquisitions.

Exel, the logistics group, is to return up to £240m to shareholders after strong financial results and a decision to slow down its spending on acquisitions.

Reporting 2004 results, which showed turnover up by a quarter at £6.3bn and pre-tax profit, before exceptionals, 15 per cent higher at £170.2m, the company said its acquisition spree was largely over. Exel has spent about £500m over the past four years acquiring businesses. The company said it was demonstrating its confidence in the short- and medium-term outlook with a 23 per cent jump in the final dividend, making for an annual payout of 29.2p a share, an 18 per cent rise.

John Allan, the chief executive, said: "The strategic direction remains the same. Having built the scale we need, the focus now turns to getting the most out of what we have."

Last year, the company paid £328m for its rival Tibbett & Britten. Exel said it planned to spend no more than £100m on acquisitions for the next two years. It said it was "reviewing its long-term capital requirements" and would report back at its annual general meeting in April. Analysts believe this will result in a share buy-back programme worth between £100m and £240m.

Mr Allan said Exel now had the global "footprint" it needed and any further purchases would be "in-fill" deals. He said the company would concentrate on integrating its existing acquisitions, improving profits at least as fast as turnover, and driving organic growth.

In 2004, organic revenue and operating profit expansion were 13 per cent and 8 per cent respectively. Exel is the world leader in contract logistics, well ahead of its rival TNT, and it is the number two player in freight management, behind DHL.

Mr Allan said Exel's freight business had outperformed the growth in both the sea and air freight markets. He added that strong trading conditions had continued this year.

Exel shares rose 4 per cent to 839p, valuing the company at £2.5bn. There has been persistent takeover speculation surrounding the group this year, with Deutsche Post or UPS seen as likely bidders. Mr Allan indicated that if the company had received a firm approach, it would have had to make an announcement.

"I don't think anyone who understands the rule book should be in any doubt about whether or not there is substance in these rumours," Mr Allan said.

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