That goes a long way to explaining yesterday's pedestrian 7 per cent rise in pre-tax profits to pounds 36.1m for the year to December. Excluding gains and losses on property sales and other disposals, operating profits are still well short of the 1991 peak.
Given the maturity of the market supplying retailers, last year's slide from pounds 22.5m to pounds 20.6m in profits from TDG's new consumer division is unsurprising. More worrying was the industrial distribution business. This relatively undeveloped market for logistics is where the excitement is expected in future, yet most of last year's growth there came from one-offs. Underlying profits soared from pounds 3.9m to pounds 10.1m.
Recent contract renewals have again been at lower margins, but TDG believes that the downturn has now bottomed out and it is hitting its target 15 per cent rate of return on repeat business. Having kept clear of the troubles affecting almost everyone else in the sector and with 6 per cent gearing, TDG should be well placed to benefit from any further rationalisation of the industry, but it could be some way off and meanwhile the group's push into plant and vehicle hire looks unexciting. Flattish profits of pounds 36m this year would put the shares, up 3p to 216p, on a forward rating of 13. About right.Reuse content