Gefco

French-owned Gefco Group is planning to sell a 40% stake in its business this year.

Car manufacturer Groupe PSA, which owns Peugeot, currently holds a 25% stake in the group after selling a 75% share of the firm to Russian Railways in 2012.

Last month Gefco Group presented IPO documents for approval to AMF, France’s financial authority, which revealed that Russian Railways is looking to reduce its stake to below 50%.

They also show that PSA plans to reduce its share to less than 10%, on the basis that Gefco’s diversification strategy means the car manufacturer no longer needs to maintain such a big stake in the logistics operator.

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Gefco chairman Luc Nadal said the IPO “comes at a time when the company has proven its ability to deliver sustained profitable growth and is well positioned to harvest further growth opportunities in the sector”.

Reducing its reliance on PSA business has been a key strategy of Gefco Group since Russian Railways took a majority stake in the business.

The group’s dealings with PSA currently account for more than half (56%) of revenue across its four divisions: finished vehicle logistics; overland & contract logistics; air & sea forwarding; and industrial services.

The logistics firm has also focused on winning new streams of business with around a third of its revenues now coming from outside the automotive sector.

Pavel Ilichev, Gefco finance & strategy vice president, said the firm has “a clear and focused growth strategy centred around five pillars: consolidate finished vehicle logistics leadership; expand auto inbound & adjacent logistics segments; continue the development of second-hand car transaction services; further grow in non-auto verticals; and continue developing new geographies & tradelanes”.

Gefco Group saw revenue grow 9.8% to €3.5bn (£3.1bn) year-on-year in the nine months ending 30 September 2018. The group predicts consolidated revenue of €4.6-€4.7bn for the full year.

UK struggles

However, the performance of Gefco’s UK division has been less stellar as it continues to struggle with falling demand for new cars and a weak pound.

Reporting its annual results to 31 December 2017, Gefco UK revealed an 8.5% drop in turnover in the period to £162.4m.

Vehicle deliveries fell by 15.8% with the number of vehicles imported by PSA decreasing by 13.3%. Annual pre-tax profit fell 8% to £11.8m.

The directors’ report said finished vehicle logistics volumes dropped “to only 199,000 vehicles from 236,000 in 2016,” which it said was due to “weak currency and the decreased demand for new cars registration”.

Gefco UK has continued to invest in developing new revenue streams, opening its third dedicated temperature-controlled warehouse for the Life Sciences and Healthcare sector at Heathrow Airport in January 2018.

It has also invested in new equipment at its Corby finished vehicle logistics centre in October.

The company’s freight forwarding arm also landed a number of new aviation contracts last year.

Gefco UK had not responded to a request for comment as this article was published.

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