Wincanton has released its half year results for the period ending, September 30 2019. It announced a 1.9% increase in revenue for H1 year-on-year and 5.9% on the previous quarter (H2 18/19). Underlying operating profit increased by 5.6% to £30.3m due to new business wins and the exit from certain low margin contracts last year. As a result, the group’s underlying operating profit margin has increased to 4.8%.
Wincanton attributed the increase in revenue to strong growth in Retail & Consumer due to new contracts with The Co-op, Morrisons and Weetabix.
The Retail & Consumer segment’s revenue grew by 5.8% to £378.3m for H1 2019. The revenue is split by industry sectors; Retail General Merchandise fell by -0.2% to £218.9m, Retail Grocery increased by 17.6% to £104.2m and Consumer Products rose by 10.8% to £55.2m. The underlying operating profit for Retail & Consumer also increased by 7.8% to £17.9m. The overall revenue increase has been driven principally by contract wins this year and in the second half of last year in Retail Grocery, including Morrisons, Sainsbury’s and The Co-op and in Consumer Products driven by the Weetabix warehousing contract win. Retail General Merchandise, which includes market-leading household, home and DIY logistics offerings, experienced relatively flat volumes but completed a number of key renewals including a four-year warehousing and transport contract with Williams Sonoma and a five-year transport, planning and fulfilment contract with Cormar Carpets.
The growth was partly offset by a -4.2% fall in Industrial & Transport revenue following exits from underperforming contracts last year. The segment’s revenue fell from £224.1m in H1 2018 to £214.6m in H1 2019. Its underlying profit increased by 2.6% to £12.4m year-on-year. The revenue split of Industrial & Transport revenue by the industry sectors; Transport Services fell by -13.7% to £77.5m, Construction grew by 2.1% to £73.7m and ‘Other’ also increased by 2.1%. The decrease in revenue in Transport Services was primarily attributable to an exit from the Britvic transport contract and a reduction in the scope of the Tarmac contracts during the prior year. Construction increased its revenue as a result of the Aggregate Industries and EDF contract wins more than offsetting prior period contract losses. The new contract with HMRC has driven the increase in ‘Other’ revenues in the first half, while key renewals include a three-year renewal with Müller for the collection and delivery of milk products.
On October 18, 2019, it was announced that Wincanton has engaged in a thorough assessment of the combination with Eddie Stobart. Inline with Eddie Stobart’s announcements to its shareholders, the date of the audit completion is not yet known. There is also no certainty on an offer being made nor as to the terms of any such offer, and a further update will be provided in due course.
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