Wincanton sells Pullman Fleet Services and announces H1 results

Wincanton

Wincanton plc has announced its half-year results for the six months ended September 30, 2020, revenues were down by -2.4% to £578.7m year-on-year. Underlying profit before tax decreased by -27.1% to £19.1m (2019: £26.2m) and the group’s underlying profit before tax margin is 3.3% (2019: 4.4%). Figures were down on the prior year as a result of the impact of COVID-19 lockdown measures, primarily in the early months of the year. The construction, energy and container markets were particularly affected, as was the company’s home delivery network due to a requirement to shut down completely for a short period.

Digital & eFulfilment delivered strong growth despite the shutdown of our home delivery network for a few weeks in April and May. There was also steady growth in both Grocery & Consumer and General Merchandise. These positive impacts were offset in overall revenue terms by the negative impact of COVID-19 on the Public & Industrial business, primarily in construction and energy operations, and in Specialist Services. This change in revenue mix had a disproportionate profit impact on the group, due to the closed book commercial mechanisms operated in the affected markets. The company signed many renewals and extensions with existing key customers including Asda, Morrisons and Screwfix over the period as well as gaining new e-commerce deals with Waitrose, Wickes and The White Company.

Digital & eFulfilment is a technology focused sector supporting the growing e-commerce market. The segment supported the recovery in those core markets most affected by the pandemic as its revenue grew by 15.7% to £65.0m from £56.2m last year. The Grocery & Consumer segment is food focused and creates connections in one of the UK’s most critical supply chains. Revenue grew by 4.3% to £215.4m from £206.5m in the same period last year. General Merchandise is a retail focused sector that aims to meet the evolving needs of multi-channel customers. It reported revenues rose from £145.9m last year to £149.6m this year, an increase of 2.5% year-on-year. The Public & Industrial sector works with customers in Construction, Infrastructure, Defence, Energy and the public sector, its revenues decline a result of the impact of the COVID-19 lockdown. Revenues for the segment were -22.3% lower than the same period last year. Specialist Services is a specialist sector for container transportation and fleet maintenance services, the company expects to exit this sector in H2. Revenue fell by 10.6% to £42.1m from £47.1m last year.

James Wroath, Wincanton Chief Executive Officer, said, “Wincanton has demonstrated agility, innovation and commitment to meet the critical supply chain needs of customers and consumers throughout the country. I am greatly encouraged by the new contracts we have secured so far this year to become a key partner for some of Britain’s biggest brands and public bodies. Performance has been resilient in the first half; we expect the good momentum with which we end the period to continue and consequently expect results for the current year to be materially ahead of market expectations.”

The company has also announced today (November 5) that it has agreed to sell its subsidiary, Wincanton Pullman Fleet Services Limited (PFS), its UK commercial vehicle repair and maintenance company, to asset management firm Aurelius Investments. The sale of PFS follows the recently announced agreement to sell Wincanton’s containers operations (Containers) and is aligned with the group’s strategy of focusing on growth opportunities in its core markets.

The nature of the market in which PFS operates is such that its contracts are smaller and carry demand risk, meaning it is not aligned with Wincanton’s core business model. As with Containers, PFS would require further investment in the near term and the sale allows Wincanton to focus on investing in areas offering higher returns.

The completion of this disposal will mark Wincanton’s exit from Specialist Services and the Group will be structured around its four core markets: Digital & eFulfilment, Grocery & Consumer, General Merchandise and Public & Industrial.

The transaction will reduce the group’s annual revenue by approximately £30m but lead to a small benefit in the group’s underlying profit before tax.

James Wroath, commented, “Wincanton has set out a clear strategy for achieving profitable growth and we have focused our teams and our investments towards those markets where we see the highest potential. Our recent disposals of PFS and our containers operations, and subsequent exit from the Specialist Services sector, is clear evidence of our commitment to deliver this strategy.”

Source: Wincanton

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