The annual results of British 3PL Wincanton were solid, despite revenues falling 2.6% to £1.17bn in the year ended 31 March 2019.
Lower annual sales were primarily driven by the timing of contract wins and losses, as “the business delivered a strong level of new business wins in the year”, it said.
“However, these were contracted predominantly in the second half of the year and made little or no contribution to revenue in the year to 31 March 2019. As such these strong wins did not fully mitigate the revenue impact from contracts lost at the end of the previous financial year and first half of this year.”
Some of the contracts it lost were lower margin, so their loss contributed to higher profitability at group level. Its underlying operating margin grew 30bp to 4.8%.
Meanwhile, underlying EBITDA rose 2.9% to £66.7m, while EBIT and earnings per share were up at 4.5% (£55.3m) and 8.8% (33.5p) respectively, in part thanks to the prior year’s restructuring and improvement initiatives.
Its core Retail & Consumer (R&C) unit’s revenues were £708.9m, up 2.5% annually. Margins increased due to an “improvement in mix arising from higher margins” in new business. The underlying operating profit was £31.2m (2018: £29.7m), up 5.1%, in a retail environment that was challenging both commercially and operationally.
Retail General Merchandise, by far the largest business line operating under R&C, saw revenues rise 9% to £423.8m, offsetting the weakness of retail grocery and consumer products businesses. This reflected, it said, strong growth in multichannel fulfilment and its market-leading two-man home delivery solutions.
Its other major unit, Industrial & Transport (I&L), was the laggard in pure growth terms, but operated more efficiently than in the past.
I&L revenues fell 9.9% to £432.6m, but underlying operating profits grew by 3.9%, with margins up 80bp.
It exited or reduced activity in a number of lower margin areas, including transport activities with Britvic and Tarmac, while still retaining these key “customers in areas where we can generate value for them and us”.
Other highlights included solid free cash flow coming in at £57.0m (2018: £25m) and net debt and pension deficit reductions, while dividends grew 10%.
Adrian Colman will step down as chief executive and be succeeded by James Wroath no later than the end of October.
Finally, notable business wins in fiscal 2018 included: EDF Energy, Weetabix, Co-op, HMRC, Aggregate Industries, Roper Rhodes, Hapag-Lloyd, Jollyes and DCS; while key renewals included major contracts with Asda, Loaf.com, Halfords, Micheldever Tyre Services, Lucozade Ribena Suntory, Marley, Ibstock, British Sugar and Valero.
Source: Transport Intelligence, May 21, 2019
Author: Alessandro Pasetti
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