Exel's results for 2000 were in line with analyst expectations but had little impact on a share pr...
Exel's results for 2000 were in line with analyst expectations but had little impact on a share price down 10% in the past few weeks. The shares were poor performers ahead of the results, on worries it could bring bad news of earnings revisions. Exel's exposure to the electronics industry has also heightened investor concerns about its earnings profile and a slowing US and global economy has damaged sentiment further.
Analysts did downgrade forecasts when the annual results were released; estimates for 2001 pre-tax profits are now down 7% to £210m from £225m because of the slowdown in the US economy. But earnings growth is still set at 10% in 2001 and 2002 and there seems to be more to come.
"The revenue benefits from last year's merger are now starting to show through," ABN Amro analysts said. "Exel won over
£300m worth of new contracts during 2000 and further gains can be expected as the group wins more work from existing and new customers."
The broker has a consensus fair value share price of £11. But the outlook from other analysts and indeed Exel's management, remains cautious, with emphasis on the economic slowdown, particularly in the technology sector and in the US.
Exel's rivals are reporting growing volumes of business on routes from Asia into Europe and across the Atlantic. This indicates that Exel will demonstrate strong growth in 2001 despite the slowing economy.
As the largest quoted pure-play logistics company, Exel is viewed as the best-of-breed share in the sub-sector.