Wincanton’s profits drop 30% as the logistics company’s customers insource their transportation needs to cut costs
- Pre-tax profit fell 30% to £38.2m, but excluding one-off costs rose 6% to £62m
- Sales increased in all divisions, with the exception of the grocery and consumer divisions
- It lost HMRC and Moonpig contracts but made new deals with Defra and DHSC
Logistics company Wincanton saw annual profits plummet by 30 percent after some corporate customers outsourced their warehouse and delivery operations to cut costs.
The group, which counts supermarkets Asda, Sainsbury’s and Waitrose, as well as retailers Screwfix and Wickes among its customers, said consumer spending pressures had affected volumes in its e-fulfilment and consumer divisions.
Pre-tax profit fell 30.3 per cent to £38.2m in the year to the end of March, also due to one-off costs related to transport reorganization and computer software it uses for some of its clients.
Excluding these costs, pre-tax profit rose 6 per cent to £62 million, with sales up 2.9 per cent to £1.46 billion.
Wincanton said it continued to win new customers, but also lost some lucrative contracts
Sales increased in all divisions except grocery and consumer, despite signing a five-year contract with Sainsbury’s.
“This is a strong performance in a challenging economic environment and especially compared to last year when we saw strong volumes in our grocery and consumer sectors,” the company said.
Wincanton said it continued to win new customers, including contract extensions with Asda and Halfords.
It also won public contracts with California’s Department of Health Care Services, DHSC, and the UK Department for Environment, Food & Rural Affairs (Defra).
However, it also lost a number of contracts, including those with Moonpig and HMRC.
The greeting card group has decided to outsource its fulfillment needs, while HMRC has chosen another supplier for a contract to manage locations to monitor incoming shipments.
Earlier this year, Wincanton warned that its profit for the current year would be ‘materially lower’ due to the loss of the HMRC contract, which would be less than the £63m analysts had priced in.
Today, it left those forecasts unchanged, telling investors that results should be in line with expectations.
While the loss of one material HMRC contract was disappointing, we remain confident that the pipeline will drive future growth through both outsourcing and consulting opportunities.
Despite the statutory loss, Wincanton rewarded investors with a 10 percent increase in dividend, or a full year payout of 13.2 pence per share.
Wincanton Shares rose 4.4 percent to 226.5 pence in afternoon trading, though they’re down about a third since the start of the year and 45 percent lower than a year ago.