City takes NFC profit fall badly

INVESTORS were yesterday disappointed by half-year results from NFC, the transport and logistics group largely owned by its employees, writes John Shepherd.

The shares lost 8p to 249p on the announcement that profits before tax, excluding a pounds 50m disposal profit, eased from pounds 37.2m to pounds 36.6m in the period to 17 April.

Turnover of the group, which encompasses Exel Logistics, BRS and Pickfords removals, rose from pounds 879.2m to pounds 976.5m.

Selwyn Jones, an analyst at Credit Lyonnais Laing, said NFC was 'a very highly rated stock and there is no room in the share price for disappointments of this sort'.

The biggest surprise was a slump from a break-even position to losses of pounds 6.1m in the Lynx parcels operation. And Peter Sherlock, recently appointed chief executive, warned: 'The parcels market continues to be extremely competitive.'

In addition, the company said economic recovery in the UK remained fragile and the downturn in Europe meant that the benefits of expansion on the Continent would be slow to materialise.

Despite the problems, however, the company remained confident that its traditional 'best view' of full-year pre-tax profits of between pounds 95m and pounds 100m would be met.

Most of the pounds 50m exceptional gain in the first half from the sale of the waste management operation will be eroded in the second half by provisions to cover fluctuations in levels of investment.

However, the seven-year-old policy of making a 'best view' projection at the annual meeting is unlikely to survive the year. 'One of the issues we are considering is, should we continue with it,' Mr Watson said.

He said the main reasons for considering dropping the policy included commercial sensitivity and the risk of being sued in the US for inaccurate profit forecasts.

Shareholders, who include 27,000 out of 30,000 employees, will receive a second interim dividend of 1.45p, up from 1.4p.

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