NFC to sub out short contracts
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• NFC is to use subcontractors for more of its less-than-12month distribution contracts. It wants to free more resources to invest overseas, says chief executive Jack Mather. Last week the group reported a 3% drop in pre-tax profits to £91m.
Its subsidiaries BRS and Exel Logistics are both expected to put out more business to local hauliers, primarily to handle extra capacity, but also for some complete contracts.
Owner-drivers could also win work from NFC, which already employs hundreds in the US.
"There is pressure on capital and on our borrowing power so we do not want to invest too much of the capital into the UK," says Mather. "We will look very hard at whether to purchase vehicles for short-term contracts, but obviously for longer-term commitments we will have no hesitation in investing in new vehicles."
NFC also plans to cut costs by making more use of its UK truck rental fleet of more than 2,300 trucks and 2,050 trailers.
Subcontracting to local hauliers will give NFC's customers the flexibility they want in a recession, says BRS commercial services managing director Theo De Pencier: "Where three years ago a customer might have a core fleet of 10 trucks with some spare capacity, now it could have six and we will use our own rental vehicles with agency drivers for extra work or subcontractors in busy periods."
In the year to 3 October NFC's turnover increased by 3.6% to £1.72bn but the transport division's profits fell by almost £6m to £26.8m.
NFC recorded year-on-year improvements in truck rental, bulk distribution and car delivery. Waste management also performed well.
But parcels delivery firm Lynx Express Delivery Network went into the red, despite significantly reducing its operating costs by converting to a hub-and-spoke system, purchasing Federal Express's Nuneaton depot in August.
The logistics division, which includes Exel Logistics, hiked its operating profit by 22.5% to £46.8m, on a revenue which increased by 17.8% to £590.5rn. The home services division, responsible for Pickfords in the UK, increased profits slightly to £23.2m by continuing to switch from private to commercial removals and storage.
Next year NFC plans to concentrate on overseas growth, particularly in France. Spain and Germany.