The Investment Column: Tibbett & Britten

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The Independent Online
SHARES IN Tibbett & Britten, which trucks groceries and clothes for the likes of Asda, have enjoyed a full recovery following their de-rating last year amidst a spate of disappointing trading news.

The return to favour comes in the wake of T&B's escape from a loss-making contract with Ford, and the market's excitement about the potential of e-commerce for logistics companies. Even so, the shares are struggling to climb further from their pre-crash levels.

Yesterday's interim results marked a break in T&B's recent history with the absence of significant bad news. However, the group's working capital outflow - a legacy of the Ford contract - was higher than expected. The group also said the UK operations, 46 per cent of sales, were having a rough ride. Clothes distribution is fine, but food retailers are becoming fastidious in their grocery orders, shrinking them to match expected demand perfectly. This, combined with competitive pressures, led to a 15 per cent drop in T&B's grocery volumes.

On the upside, the US business and Axial, the motor arm, is performing strongly. Factors depressing profits, such as start-up costs and millennium bug preparations, should soon evaporate. Analysts expect pre-tax profits of pounds 31.5m and earnings of 43.5p this year, rising to pounds 35.5m and 49p in 2001. T&B has proved its competitive strengths overseas, but the domestic problems are a concern. At 537.5p, down 22.5p yesterday, the shares look risky.

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