Logistics firm Wincanton saw annual profits tumble 30 per cent after some corporate customers insourced their warehouse and delivery needs to cut costs.
Pre-tax profit fell 30.3 per cent to £38.2million in the year to the end of March, also reflecting one-off costs relating to transport reorganisation and computer software it uses for some of its clients.
Excluding these costs, pre-tax profit rose 6 per cent to £62million – a record for the company and slightly ahead of some analysts’ expectations, sending Wincanton shares rising.
Wincanton said it continued to secure new business, but also lost some lucrative contracts
The group, which counts supermarkets Asda, Sainsbury’s and Waitrose as well as retailers Screwfix and Wickes among its customers, said the squeeze on consumer spending had impacted volumes at its e-fulfilment and consumer divisions.
Revenues rose 2.9 per cent to £1.46billion, and across all divisions except for its grocery and consumer arm, despite securing a five-year contract with Sainsbury’s.
‘This is a strong achievement against a challenging economic environment and in particular compares to the prior year that saw strong volumes across our grocery and consumer sector,’ the company said.
Wincanton said it continued to secure new business, including contract renewals with Asda and Halfords.
It also bagged public contract wins with the UK’s Department of Health and Social Care, DHSC, and the 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 decided to insource its fulfilment needs while HMRC has opted for another supplier for a contract to operate sites to check inbound shipments.
Earlier this year, Wincanton warned profit for the current year would be ‘materially lower’ due to the loss of the HMRC contract, falling short of the £63million pencilled in by analysts.
Today, it left those forecasts unchanged, telling investors results should be in line with expectations.
‘Whilst the loss of one material HMRC contract was disappointing, we remain confident that the pipeline will provide growth in the future through both outsourcing and consulting opportunities,’ it said.
Despite the statutory loss, Wincanton rewarded investors with a 10 per cent hike to dividend, or a full-year payout of 13.2p per share.
Wincanton shares rose by 4.4 per cent to 226.5p in afternoon trading, though they remain down by around a third since the start of the year and 45 per cent lower compared to a year ago.
Analysts at Peel Hunt said the results were slightly ahead of their forecasts and represented an ‘excellent’ year for the group.
‘This was a challenging year, with lower customer volumes impacting 2H and inflationary pressures,’ they said.
‘However, these were successfully managed with major customer wins across the group’s four sectors as well as strategic investments in robotics and automation.’
