The Investment Column: NFC shake-up

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LIKE PILKINGTON, NFC, the logistics and removals group, has been pursuing a restructuring programme and yesterday's interim results included the expected exceptionals. However, in NFC's case, the reorganisation is complete and the pounds 9m hit to operating profits came from the adoption of new accounting standards.

NFC can now focus on growing its Exel Logistics business, which provides blue-chip clients with services such as distribution and warehouse management. As consumers become more demanding and product cycles shorten, companies are outsourcing these activities. Recently, Exel has gained contracts from Marks & Spencer, Sainsbury's and Nissan, among others. Analysts estimate around 60 per cent of the European market for these services remain in- house.

The interims show Exel is well on track. Interest costs dented profit before tax by pounds 9m following the buyback of shares, but investors will reap the rewards in earnings per share growth of 18 per cent. Analysts expect profits of about pounds 116.5m and earnings of 12.9p per share for the full year. Despite the recent rally the shares, at 188.5p, are still looking cheap on a p/e of 15 given Exel's prospects.