Wincanton Q1 revenues fall but strategic shift brings rewards
Logistics provider Wincanton saw revenues decline in the first quarter, as economic headwinds hit its general merchandise, consumer and grocery divisions’ volumes.
According to its first quarter update to 30 June this year, the group’s revenues, excluding closed book contracts, were down 4.5% year-on-year in the period.
When closed book transport contracts are included for the first quarter, the figure is 10.4% lower, with a 5.6% slide in grocery and consumer, and a 16.9% drop in general merchandise.
However the trading statement notes that these figures have to be taken in the context of its strategic reorganisation, outlined in the May’s final results, which has ushered in a technology-based transport strategy. As part of this strategy, Wincanton is exiting closed book transport contracts, where no protection exists.
The trading update added that this strategic shift in transport towards open-book contracts is already delivering early benefits.
Following the reorganisation the group has won new business for its Transport Control Tower offering with Sainsbury's and Breedon, while a dedicated transport contract with New Look has started and a long-running transport partnership with Halfords has been extended for another five years.
Revenue in the e-fulfilment arm increased 15% in the first quarter, with the group landing several new contract wins, set to start in the second quarter, including its expansion into Ireland with IKEA and into final mile delivery in Greater London.
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Other wins include its UK launch with US furniture retailer Restoration Hardware and the provision of fulfilment services for Neom Organics and Brewers Decorator Centres.
Revenue increased 2.1% in the public and industrial sector, with growth in defence sector customers and EDF Hinkley Point offsetting reductions from the contracts with HMRC and DEFRA.
Late last month the group secured an expanded three-year contract with defence contractor Rheinmetall BAE Systems Land (RBSL), plus a 10-year warehousing and logistics partnership for British Salt.
Despite the fall in revenue Wincanton said it is continuing to trade in line with market expectations, with analysts predicting full-year profit before tax of £50.4m.
The trading statement concluded: “Wincanton is well-placed to continue to navigate the challenging external environment with its successful strategy and continued investment in automation technology, underpinned by its diversified customer base.
It added that the group’s strategic shift in transport towards open book contractual agreements “will deliver both financial and operational benefits” and said Wincanton “maintains a resilient financial position with a strong balance sheet and consistent cash generation.”
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