Sir Christopher Bland, chairman, said the latest round of restructuring, which will include a pounds 49m exceptional charge in the full year results, would be the last. Unveiling a 17 per cent rise in pre-tax profits to pounds 53.3m for the half year to March, he said NFC had achieved significant earnings growth while disposing of two big businesses where the group did not think it had a future. Sir Christopher said NFC was now out of the woods. "We can now indeed see the wood from the trees."
The group is selling its BRS car leasing operations to GE Capital of the US in a pounds 120m deal, while the Lynx parcel delivery business in the UK is going to management in pounds 34.4m buy out. The remainder of the cash being raised will come from the disposal of the remaining removals businesses of Pickfords in the US and Canada and the rationalisation of some 60 properties in the UK, which are expected to raise pounds 30m. In addition, NFC expects to pick up pounds 32m from relinquishing three "uneconomic" transport contracts with Whitbread, Homebase and Boots.
Gerry Murphy, chief executive, said the exercise would liberate around pounds 200m, of which 20 per cent would be spent on restructuring and the rest on investment in higher than average growth businesses in growing markets. The target would be to achieve rates of return in the mid to high teens.
The reorganisation would see some 500 to 600 redundancies, with the majority in the UK, Mr Murphy said, but precise numbers would depend on how successful they were at reallocating staff. One of the casualties is Graham Roberts, currently chief executive of Continental European operations, who has resigned from the board and will leave the group at the year end. His departure follows a decision to integrate the management of the UK and Continental businesses, where losses grew in the year.
The disposals will throw up a net profit of pounds 20m in the second half and, contributing profits of pounds 15.5m last year, will result in some earnings dilution, NFC said. The group announced a 2.5p interim dividend and said it expected to pay a final of 5.75p, which would be the fourth year runnning the dividend has been held. Sir Christopher said the plan was to rebuild cover, with 1.7 to 2 times more typical at other companies.