NFC admits to failures as group profits collapse

NFC ate humble pie in the City yesterday, admitting that the group's potential had failed to be realised in all its divisions and acknowledging that one of the main challenges facing the new chief executive, Gerry Murphy, was a complete change of culture. The City fretted about the pace of reform, downgrading profits forecasts by pounds 10m to pounds 95m and knocking 10p, or 7 per cent, off the company's shares.

At 139p, the shares have more than halved since the beginning of last year, further tarnishing the employee co-operative dream that began with a workers' buyout from the government in 1982 and brought the company to the stock market three years later. After a honeymoon period in the early 1980s, falling profits and bitter boardroom rows have proven that NFC is just another company operating in cut-throat markets.

Figures for the 12 months to September, already struggling under tighter operating margins, were scarred by a pounds 35m exceptional provision to cover overhead reductions, loss-making businesses and the write-off of "non- performing assets". Mr Murphy, who took over at the top after the company had spent a fruitless six months looking for a new chief, said 1,000 jobs had gone since the restructuring began although these had been offset by recruitment in other areas of the business.

Mr Murphy replaced Peter Sherlock, who was similarly brought in by the company to restore its previous fortunes but fell foul of an old guard unwilling to carry through his radical recommendations. Yesterday's figures were presented as the result of the previous regime's mismanagement but attention is focused on how quickly Mr Murphy can transform the company.

He now runs a business that has in effect severed all links with the old ideal of a share-owning co-operative. In October, employee shareholders lost the double voting rights they had enjoyed since the flotation of the former National Freight Corporation.

The extra voting powers, designed to protect employees, were lost after their shareholding dipped below 10 per cent. At privatisation NFC workers and their families owned more than 80 per cent of the company.

Despite a 7 per cent rise in sales to pounds 2.2bn, operating profits tumbled from pounds 118m to pounds 88.8m. After the pounds 35m exceptional provision, most of which was actually used during the year, pre-tax profits collapsed from pounds 105.6m to pounds 38.6m. Earnings per share slid from 11.2p to 2p, failing to cover the maintained dividend of 7.1p.

Exel Logistics, the core UK third-party distribution arm, which accounts for almost half group sales, saw a 9 per cent slide in profits as new business wins from Milk Marque, British Steel and Thorn EMI failed to make up for tighter margins and the impact of a considerable management upheaval. The division had been broken up into 12 separately accountable and more manageable units responsible for supplying different industries.

Overseas, NFC's loss-making European operations fell deeper into the red, losing pounds 10.1m compared with 1994's pounds 4.8m deficit. In North America, profits halved to pounds 14.7m as renewed business was struck at less attractive margins and the weak US housing market held back the moving services operation. The small rest-of-the-world business was flat year-on-year.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Customer Relations Officer

£13000 per annum: Recruitment Genius: This is an exciting opportunity to join ...

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Recruitment Genius: Evening Administrator

£8 per hour: Recruitment Genius: This Pension Specialist was established early...

Guru Careers: Executive Assistant / PA

£30 - 35k + Bonus & Benefits: Guru Careers: We are seeking an Executive Assist...

Day In a Page

Homeless Veterans campaign: Donations hit record-breaking £1m target after £300,000 gift from Lloyds Bank

Homeless Veterans campaign

Donations hit record-breaking £1m target after huge gift from Lloyds Bank
Flight MH370 a year on: Lost without a trace – but the search goes on

Lost without a trace

But, a year on, the search continues for Flight MH370
Germany's spymasters left red-faced after thieves break into brand new secret service HQ and steal taps

Germany's spy HQ springs a leak

Thieves break into new €1.5bn complex... to steal taps
International Women's Day 2015: Celebrating the whirlwind wit of Simone de Beauvoir

Whirlwind wit of Simone de Beauvoir

Simone de Beauvoir's seminal feminist polemic, 'The Second Sex', has been published in short-form for International Women's Day
Mark Zuckerberg’s hiring policy might suit him – but it wouldn’t work for me

Mark Zuckerberg’s hiring policy might suit him – but it wouldn’t work for me

Why would I want to employ someone I’d be happy to have as my boss, asks Simon Kelner
Confessions of a planespotter: With three Britons under arrest in the UAE, the perils have never been more apparent

Confessions of a planespotter

With three Britons under arrest in the UAE, the perils have never been more apparent. Sam Masters explains the appeal
Russia's gulag museum 'makes no mention' of Stalin's atrocities

Russia's gulag museum

Ministry of Culture-run site 'makes no mention' of Stalin's atrocities
The big fresh food con: Alarming truth behind the chocolate muffin that won't decay

The big fresh food con

Joanna Blythman reveals the alarming truth behind the chocolate muffin that won't decay
Virginia Ironside was my landlady: What is it like to live with an agony aunt on call 24/7?

Virginia Ironside was my landlady

Tim Willis reveals what it's like to live with an agony aunt on call 24/7
Paris Fashion Week 2015: The wit and wisdom of Manish Arora's exercise in high camp

Paris Fashion Week 2015

The wit and wisdom of Manish Arora's exercise in high camp
8 best workout DVDs

8 best workout DVDs

If your 'New Year new you' regime hasn’t lasted beyond February, why not try working out from home?
Paul Scholes column: I don't believe Jonny Evans was spitting at Papiss Cissé. It was a reflex. But what the Newcastle striker did next was horrible

Paul Scholes column

I don't believe Evans was spitting at Cissé. It was a reflex. But what the Newcastle striker did next was horrible
Miguel Layun interview: From the Azteca to Vicarage Road with a million followers

From the Azteca to Vicarage Road with a million followers

Miguel Layun is a star in Mexico where he was criticised for leaving to join Watford. But he says he sees the bigger picture
Frank Warren column: Amir Khan ready to meet winner of Floyd Mayweather v Manny Pacquiao

Khan ready to meet winner of Mayweather v Pacquiao

The Bolton fighter is unlikely to take on Kell Brook with two superstar opponents on the horizon, says Frank Warren
War with Isis: Iraq's government fights to win back Tikrit from militants - but then what?

Baghdad fights to win back Tikrit from Isis – but then what?

Patrick Cockburn reports from Kirkuk on a conflict which sectarianism has made intractable