The company considers its place in the UK supply chain to be of vital importance, especially in food, drinks, other household items and fuel. Wincanton says it has been working closely with customers and the Government to maintain operations and plan for the challenging period ahead.
Earlier in 2020, it established a central business continuity management team, resulting in the development of extensive plans with its customers to help ensure operations can be maintained in the event of temporary labour shortfalls or site closures. It has adopted working practices to minimise the risk of contagion, including the redeployment of both staff and fleet across sectors. For example, it has deployed a number of staff and vehicles from its General Merchandise sector into the Grocery sector and is supplementing customer-dedicated transport with its general haulage fleet.
Wincanton points to its long-standing relationships with customers and says it has been proving particularly helpful as it works through the impacts of COVID-19.
The company stated that overall some 64% of its contracts are open book with retail being even higher at over 80%, giving it a strong level of commercial protection. Its closed book business includes its home delivery, construction and transport services businesses, where it reported good volumes.
Wincanton says it has a level of flexibility in its cost base with the use of agencies and subcontractors, the use of short-term hire vehicles in its fleet as well as in its warehouse properties operating with high levels of utilisation. These arrangements, Wincanton says, minimises its working capital exposure and protects it against delays in customer payments.
2019 Trading update
Ahead of the full year results for the year ending March 31, 2020, currently expected to be announced on May 20, 2020, Wincanton says that underlying profit will be in line with market expectations and net debt at year-end will be down to between *£10m and £15m. Whereas, revenue growth of over 4% for the year is slightly ahead of expectations and is said to reflect new business and strong volumes throughout the second half in the retail and consumer sector. The profit arising from a property gain in the first half, will be partially offset by costs in association with M&A activity, principally relating to the possible acquisition of Eddie Stobart Logistics plc.
Its balance sheet has been strengthened in terms of net debt reduction and pension deficit improvement. Its pension position moved into surplus in late 2019 and the hedging arrangements are expected to provide good protection against the recent financial market movements.
It has a £141.2m Revolving Credit Facility (RCF) with a syndicate of five, which matures in late 2023, an uncommitted accordion facility of a further £40m and a £7.5m overdraft facility. Despite its stated substantial headroom in terms of both level of facilities and covenants, Wincanton said it will take additional steps to maximise its liquidity headroom to allow for any slowdown in trading and/or delays in receipts, including a close liaison with customers to ensure cash flows and making use of the Government’s recently announced measures, such as delaying the next quarterly VAT payment, giving it a working capital benefit of some £30m. In addition, the management of its cost base is being tightened with the halting of discretionary operating and capital expenditure, though overall the company remains optimistic during this period.
* GBP1 = €1.11 / GBP1 = $1.22
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