Profits fall as NFC fails to shift Lynx: Half-time payout up 8% with benefits forecast from shake-up

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NFC, the transport group, which admitted yesterday that it has failed to find a buyer for Lynx, its loss- making parcel delivery service, saw its shares fall by 10 per cent from 219p to 198p.

'During the first half NFC considered a number of approaches received from third parties. None represented a realistic option and discussions have been terminated,' the group said, announcing its interim results.

NFC said it had made changes that it hoped would enable Lynx to contribute to profits. In the half year Lynx's operating loss shrank to pounds 4.2m from pounds 7.3m.

Group pre-tax profits fell by 43 per cent to pounds 49m against pounds 86.6m for the six months to 16 April. Last year's profit was inflated by pounds 50m through the sale of NFC's waste management business. The latest figures have also been flattered by an additional pounds 2.5m refund from the pension fund. Without these, underlying operating profit was up by 12 per cent at pounds 41.5m.

Lynx registered one of the better divisional performances in the half year. Profits from the UK logistics business were level at pounds 30m and the US side performed similarly, contributing pounds 12m.

NFC's European operation, hit by the Continental recession, slipped to a loss of pounds 1m from a profit last time of pounds 300,000. Peter Sherlock, the chief executive, said NFC was working with customers who rarely allowed price increases. Nevertheless, operating margins - excluding the pension credits - widened from 3.8 to 4 per cent.

NFC has set aside pounds 45m to cover reorganisation, which includes redundancies, training and resourcing of supplies.

Richard Sanderson, an analyst with the stockbroker Panmure Gordon, said: 'NFC's profit was fairly flat if you look at the underlying trend. The reorganisation will yield benefits, if not this year, then certainly next.'

He cut his profit forecast for the current year from pounds 120m to pounds 117m. Next year he believes profits may bounce back to pounds 140m.

For the six months earnings per share, including exceptionals, fell from 12.9p to 5.8p. The interim dividend was lifted 8 per cent to 2.9p.

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