Exel lifted by acquisition spree

Logistics group Exel hailed the success of its strategy on acquisitions today as it reported a 15% hike in half-year profits.

Exel said the benefits of recent deals, including the purchase of Fujitsu Logistics in Japan, and strong turnover growth had offset the impact of a “small number” of underperforming units.

The is attempting to woo shareholders in rival Tibbett & Britten after unveiling a £328m (€494m) offer for the group last month.

The merger between Exel and Ocean Group (of which MSAS was a part), brought together two of the market leading logistics companies in Ireland. Exel operates from 12 locations in Ireland, with a further eight implant teams located on-site at customers facilities supporting supply chain management programmes. The company employes 800 people in Ireland.

Pre-tax profits of £72.2m (€108.7m_ were higher than the £63m (€94.9m) reported last year, while revenues also grew 15% to £2.62bn (€3.9bn) during the six months to June 30.

Chief executive John Allan buoyed investors with news of “positive trends in trading” combined with improved economic conditions in most regions of the world.

“Exel believes it is well positioned to make good underlying progress in 2004,” he said.

Exel employs 74,000 people in more than 120 countries and recently said it would add 1,000 jobs through the creation of a £65m (€97.9m) centre at Worksop, Nottinghamshire, to handle work for DIY group B&Q.

Contract wins were helping to drive revenue growth and Exel said today it had won a five-year contract worth £150m (€225.9m) with retail group Nisa-Today’s.

It builds on an earlier agreement and means Exel will distribute products to Nisa Today’s 3,500 stores across southern England as well as managing its new distribution centre in Harlow, Essex.

Annualised revenue from new business clinched during the first six months of 2004 was “encouraging” at £450m (€677.8m). This comprised £250m (€376.6m) from contract logistics and £200m (€301.3m) from freight management.

The company said growth in world trade led to increased air and sea freight volumes, with turnover from the division ahead by 14% at £1.13bn (€1.7bn).

But profit growth from the business was restrained by higher fuel prices and capacity restrictions in Asia Pacific.

Exel, whose clients include Marks & Spencer and JD Wetherspoon, said revenues from its contract logistics business improved nearly 17% to £1.43bn (€2.2bn).

Investec analyst John Lawson said Exel had produced a strong trading performance and the second half would reveal whether its takeover of Tibbett & Britten had been successful.

Exel believes the deal will strengthen its position in emerging markets such as the Americas and Asia Pacific, and generate savings of between £15m (€22.6m) and £20m (€30m).

Mr Lawson added: “We believe that the T&B acquisition will in time prove to have been an astute move. Investors should remember that the deal is almost self-financing if the targeted cost savings are achieved.”