Wincanton results buoyed by growth in retail sales

Wincanton reported a decent set of annual results for the year ended March 31, 2018, thanks to rising revenues of 4.8% and significantly higher underlying earnings per share, up 11.2% to 30.8p on a comparable basis.

The headline numbers released today by the UK haulage and logistics firm were boosted by a “strong delivery of our organic growth strategy through attracting new customers and increasing share of wallet with existing customers”.

Annual revenues came in at £1.17bn, while underlying EBIT and EBITDA grew slightly to £64.8m and £52.9m, respectively. Statutory results were less impressive but include several adjustments, so they are hardly meaningful for comparable purposes.

“Underlying operating profit increased by 1.5% to £52.9m (2017: £52.1m), benefitting from a strong operating performance in Retail & Consumer (R&C) partly offset by operational challenges in Industrial & Transport (I&T) and the inclusion of end of contract settlement credits in the prior year.”

The R&C unit was helped by growth in multichannel services across the general merchandise portfolio, especially in Home & DIY, while the I&T division found it more difficult to grow as profitably as it did in the past year, for several reasons.

Its R&C portfolio of assets saw sales rise 6.5% to £691.7m, with underlying margins expanding 30 basis points to 4.3% from 4% one year earlier.

Turnover from retail general merchandise was up 21.8% to £384m, boosted by contract wins and volume growth, which offset falling revenues in retail grocery, down 13.5% to £197.8m. Meanwhile, consumer products sales, the third pillar of its R&C unit, grew above inflation at 4.4%, reaching £109.7m for the year.

In contrast, I&T revenues rose just 2.4% to £480.2, with underlying profit down 11.8% to £23.2m from £26.3m one year earlier, which resulted in a significantly lower margin of 4.8% versus 5.6% in the prior year.

Transport services grew 1.6% to £210.3m, yet the 12% rise in construction sales to £150.6m was partly offset by lower sales in other activities of the I&T unit, with the company saying that lower than expected volumes in our final quarter had an impact, as well as “the poor weather and the year-on-year impact of the cessation of a contract within our defence operations in the prior year”.

Chief executive Adrian Colman added: “We have also taken action to reposition the cost base and capacity in some of our transport operations and support functions to address the trading challenges we faced within Industrial & Transport in the year and to ensure our business is competitively positioned going forward.”

Its share price has surged over 15% since mid-April after London-based investor Gatemore Capital tried to push management to consider the sale of one of its two core haulage and logistics businesses, calling Wincanton a “sleeping giant”.

Source: Transport Intelligence, May 17, 2018

Author: Alessandro Pasetti


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