TDG's Australian arm sold for pounds 21m

TRANSPORT Development Group, the haulage and distribution business, has completed its withdrawal from non-European markets with the pounds 21.5m sale of its Australian subsidiaries.

It also announced that Harris Distribution, another division, had lost a contract with Mars Confectionery to operate two warehouses with combined annual revenues of pounds 5.4m.

Stephen Bentley, TDG's finance director, said: 'We have indicated for some time that we were focusing on Europe. This process began three years ago.' The company has already sold its US businesses and now has none remaining outside Western Europe.

TDG said that the proceeds of the Australian sales, payable in cash, would be used for expansion in its core business areas of transport, distribution, storage and hire on the Continent.

'Like many British firms, we found that it is more difficult to operate in a market all the way across the world and that you need to be a certain size to do it well,' Mr Bentley said.

He added that there was no sign of improvement so far in key markets on the Continent.

Analysts had expected the disposals, but said the loss of the Harris contract was disappointing. 'It was high prestige and one of the first distribution contracts they won,' one analyst said.

Harris will continue to run the warehouses until late 1995, which TDG said would give the company time to find replacement business. It will receive an undisclosed amount of compensation from Mars for termination of the contract.

TDG provides other warehousing and distribution services to Mars, an major important customer. It has been told that it will continue to be invited to tender for Mars contracts.

The broker BZW forecasts underlying profits for the group of around pounds 33m, similar to last year, but a pre-tax figure of pounds 21m due to losses on disposals. The broker expects there to be no growth in the dividend.

The shares closed 4p higher at 323p.