Some people may believe that irregular dimension and weight is a prerogative of the slimming industry but for mixed parcels carrier Nightfreight, IDW is profitable business.

The Willenhall company’s vehicles chart their way across Britain’s highways 24 hours a day and carry about 18 per cent of the IDW market, worth more than pounds 325 million annually.

Things of irregular dimension and weight -ladders, DIY goods, fencing, furniture, bicycles and garden equipment among them -are not the sort of manufactured goods that many carriers want to deliver.

When Robert Kelly, Nightfreight’s chief executive, led the buyout of the business two and a half years ago with the help of venture capital provided by Barclays Private Equity, which owns 80 per cent of the business through its shareholding, it was quickly recognised that the IDW sector could be lucrative.

Robert said: ‘We identified IDW as an important niche for our business and our research was telling us that other carriers saw it as ‘don’t-want-it-freight.’ ‘It is now time we did some more research in this area to see what has changed but it is a sector worth about pounds 325 million and that is just the overnight part of it. We are now more sophisticated and able to do a more accurate measurement of that market.

‘The bulk of the market share is held by small carrier operations and while some packets carriers will also have some IDW business on their vehicles they do not really want it.’

This is mainly because their vehicles are not designed to accommodate the irregular shapes and more importantly the conveyor belts at the hubs where they are sorted are unable to get them through the corners used by the automated conveyor systems.

To counter that problem Nightfreight has fitted its depots and hubs with automated systems that can deal with these problems.

‘The conventional carriers have culled the IDW work and it goes back into the market and we have tried to make a virtue of getting that business.

‘Some of these carriers have told their customers to contact us to do the IDW carrying they want. That is very nice of them, isn’t it?’

In the earlier stages of the Nightfreight business it had about 15 per cent of the IDW market, but one of its biggest competitors withdrew from the sector which saw the Willenhall company’s business rise to an estimated 17 per cent to 18 per cent of the market.

While it puts Nightfreight as the market leader it is hardly monopolistic and there is a fair market for the company and its rivals to win more business.

But Nightfreight, which has 1,800 employees throughout the UK, has no intention of letting this lucrative business slip away and it has now registered IDW terminology Europe-wide although the company does not operate on the continent.

For more complex and specialised cargoes of IDW has two-man teams to make deliveries and this division of the business also delivers and installs vending machines and trains people to look after them.

Nightfreight also removes them and looks after the recycling of the machines or stores them. Its involvement in this area is acknowledged as a high value added service.

The overall business is making good progress with turnover rising frompounds 67.1 million in 1997 to pounds 98.1 million in the 12 months last year when profits came in after tax at pounds 1.91 million. Group operating profits before exceptional items and goodwill amortisation was pounds 9 million equal to 9.2 per cent of turnover.

But with venture capital money in the business, a time will come when Barclays Private Equity takes its exit option.

‘A venture capitalist’s aim in life is to determine how to make a return on the investment and, as you know, they work within a three to five year time frame and there are different ways they can get a return,’ said Robert. They could have a trade sale, refloat the business or use one of the many re-financing methods.

He said: ‘But either way they would look for a return on the investment within a defined period.

‘One of the decisions the four of us in the buyout took at the outset was that we wanted to be fair and open about the whole process and we wanted to expand the shareholding.

‘We gave away some shares to 60 managers within the business and we have been open with them since we bought the business.

‘We have explained the situation to them and any exit by the venture capitalist investment would be on the back of a successful business. That means job security in a business that is going forward.’

Sitting in the boardroom at Nightfreight’s offices in Crestwood House, at Willenhall, Robert said the company had more selfdetermination that it had as a quoted company on the London Stock Exchange. ‘There is a good management team and a lot of self- determination and we can lay out a strategy and implement it with the bank. The decisions are taken in this room and we have always been open about the ebb and flow of the business with Peter Gent, the non-executive chairman, and Steven Silvester, a nonexecutive director who are with Barclays. ‘To be master of my own destiny is what drives me but at present we are too early into the process but the venture capital involvement is something that one thinks about because of the structure of the business. There is still a lot to do,’ said Robert.

With the implications of venture capital put on one side what does the future hold for Nightfreight.

The aspiration is for turnover to double with acceptance that the company is still ‘average and still tailoring its IDW niche in the UK.’

A wider European dimension to the business with operations on the continent may come in the medium term but it was now listed as a must do development.

‘In three or five years time the business should be bigger, a great place to work, meaning that our employees like working for the company and that we give a second-to-none service.’

Although last year’s turnover was pounds 98.1 million it reflects bits of the business being sold-off and on a like-for-like basis turnover would have been about pounds 125 million if the parts sold had been retained.

The future may see some small acquisitions.

Robert said: ‘The business is growing organically at a healthy rate and there are opportunities to reinforce some smaller areas of the market we operate in.’

But like all companies that rely on good transport links, Robert said it was important that the Government made it clear what it was intending to do with roads investment.

‘Running our business is one thing but the Government must give us clarity about what it intends for future investment and what its programme really is.’