The Investment Column: NFC heads in the right direction

Has NFC reached a turning point? For the first time since he took the wheel of the transport and logistics group, Gerry Murphy is running what looks like a relatively stable business. True, this has taken two and a half years, during which time the shares have fallen by a fifth. But the absence of any disasters from the full-year results, which showed operating profits from continuing operations rising 4 per cent to pounds 108.6m, suggests the worst may be over.

Most of the restructuring has been done - the pounds 49m charge which dented this year's profits should cover any remaining redundancies. Unprofitable contracts have been terminated and the worst subsidiaries sold. Meanwhile, the UK and US divisions are buoyant - operating profits rose 10 per cent and 12 per cent respectively.

That said, there is much still to do. Losses in continental Europe deepened, mainly due to strikes in France. Turning those businesses around will take time. Meanwhile, management of the Exel Logistics arm is working hard to increase the "value added" aspects of its service in an attempt to shield itself from cut-throat price competition.

In the name of shareholder value, NFC is also planning to put its pounds 53.4m cash pile - the result of its disposal programme - to better use. The cash may be spent on an acquisition, possibly in the US. However, the group could also hand back pounds 250m to shareholders and keep gearing below 40 per cent.

All this is welcome news. However, with the shares - up 1.5p yesterday to 145p - already on a multiple of 15 times broker Greig Middleton's 1998 earnings forecast, the upside looks limited. Mr Murphy may have successfully halted NFC's decline. But that doesn't mean the company is suddenly going to start generating runaway growth.