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T alk to TDG's chief executive David Garman for any length

15th August 2002, Page 32
15th August 2002
Page 32
Page 33
Page 32, 15th August 2002 — T alk to TDG's chief executive David Garman for any length
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of time and it soon becomes clear that this is a man who considers himself to be on a mission. Five years ago TDG was best known for its "juggler' logo and for the fact that it was a solid, if unremarkable, performer that went about its business quietly and efficiently. Bulk chemical movements were the order of the day, coupled with general haulage and all the successful-tender generated work it could get its hands on.

Today the company is about to complete a restructuring process, and it's all looking rather different.

"When I took over in T999 the company worked predominately in the UK, and was an asset-based storage and distribution company. We are now a company offering supply chain solutions and contract logistics on a pan

European basis," says Garman. So what's 11.1 changed, and has it been successful?

The first things to point out about the corn pany that used to be known as Transpor Development Group is that of all the publicl quoted plcs in the sector, TDG is one of th( smallest. If you take turnover as a good indi cator, it is a third of the size of Tibbett 8 Britten, tiny in comparison to Exel anc smaller than Christian Salvesen. However, i does make money.

The last comparison is a good one becaus( although TDG's turnover is approximatel two thirds of Salvesen's, TDG actually mad.t marginally more profit last year.

The second thing to note is that the corn pany has a bit of heritage. TDG can trace it lineage back as far as 5922 when the owner o the General Lighterage Company startec expanding into warehousing and road trans port By 5957 the transport side of the opera ion had all but taken over and the company hanged its name to Transport Development ;roup. The first expansion into Europe was in 963, and business acquisitions in France and iolland quickly followed, By 1986 there were _round iota operating companies in the UK, urope, North America and Australia. iowever, with the 199 OS came a realignment If its business and the selling off of busileases not considered central to its future. -'ompanies in America and Australia were lisposed of, and in 2000 the company hanged its name again to TDG plc.

Today around So% of its profits are derived i-om its contract logistics business, and its ;eneral haulage division is no more. ::onsumer goods make up most of its loads trid although it still carries significant quantiies of chemicals, all the recent growth has rime from the packaged chemical sector ather than bulk tanker work. The company has an interst in intermodal transport, nostly via its Grangenouth depot and client P. and significant Dame shopping intersts through another iig client, Littlewoods. le storage and distribIlion side of the busiless has been slimmed

down—it exited the McPherson distribution business and rid itself of Io cold and ambient stores that were losing money last year. Other clients include Honda, Kimberly-Clark, Trebor Bassett, Du Pont and several large brewers and retailers—a real mix, in fact.

Looking abroad

In line with its competitors. TDG has looked to expand away from the "mature' UK market, and Garman makes no secret of the fact that he eventually wants half its business to be done outside the UK. When he joined TDG it derived around 14% of its income from outside the UK—today that figure exceeds 30%. The company now has significant ventures in Ireland, France and Holland, smaller interests in Spain. Poland and Germany, and intends to expand into Portugal. Turnover for operations

in France and the Netherlands rose by 54% during 2001.

Unlike some of its competitors, it has not rushed into purchasing business abroad but has expanded into new geographical areas, almost on the back of its customers' expansion plans. Garman says the logistics market in Europ is still very fragmented, and that no compan can claim to have a 5% market share. Readin between the lines, he appears happy to expari with his customers organically, and with a fes carefully chosen acquisitions, rather than b chasing growth through a series of purchase that might be regretted later.

Garman suggests the real change in th way the company does business, however, ha been in its philosophy. The company ha spent the last three years developing a raft c "products" or business models which it rack ifies according to customers' requirement and now has several supply chain analysts ac ing as consultants.

"In the past we got the majority of our bus ness through the tendering process—toda we have a range of successful products whic we actively sell to our customers. We ar going out into the market and saying 'this i how we can improve your supply chain'," h says.

He also makes a lot of its flexible approad pointing out that there are no fixed formula to which managers have to adhere. Aroun 40% of the contract logistics business is cor ducted on an open book basis where account can be scrutinised by either party, but thz could change in the future, he says.

Certainly Garman talks a good game an the company's success or otherwise is cleanl in his hands. It has a flat management stmi tare that he claims is quick to respond to cm tomers' needs, and its clients appear to lik what they're doing as many have been wonl ing with TOG for several years. The key t future success appears to rest on how : expands into Europe. Too many big firms in variety of sectors have bought unwisel recently and come a cropper. It remains to b seen how it fares in this respect.

Like its competitors, TDG is still vulnerabl to the ups and downs of the world econom: although its flexible approach to the way : does business should ease some of the pain i difficult periods. The share price is ridin along at the top of its range, and the compan should benefit from the recent problems i stock markets which will encourage investor to return to less risky sectors such as tram port. The CM tip? A good stock for a balance portfolio.


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