Wincanton profits fall on weak transport activities
Source - SMW
Supply chain solutions provider Wincanton's underlying operating profit fell 1.5% to £25.7m in the six months to 30 September after a strong performance in Retail & Consumer was offset by the weaker Industrial & Transport division.
The underlying operating margin has reduced to 4.4% from 4.6% a year ago.
Underlying profit before tax grew by 8.7% to £22.5m, driven by lower net finance charges.
The company is in the middle of a restructuring programme to deliver greater efficiencies, which resulted in an exceptional cost of £2.9m in the half year.
Revenues increased by 3.4% to £581m, driven primarily by the impact of contract wins announced in the prior year and strong volume growth with Home & DIY customers.
Retail & Consumer revenues were £333.9m, up 4.5% on the prior year, while underlying operating profit increased by 28% to £15.1m as a result of the start of the new contracts announced in the second half of last year.
Industrial & Transport revenues rose 2% to £247.1m, but underlying operating profit was £10.6m, down 25.9%, due to lower volumes in Transport services and a weaker than expected operational and financial performance from certain transport-related activities together with property-related credits from a contract cessation recognised in the prior period.
Net debt increased to £43.5m from £32.2m a year ago.
Adrian Colman, Wincanton chief executive officer, said: "During the period we successfully commenced operations on a number of new contracts, which have helped mitigate some of the trading challenges we faced in Industrial & Transport, highlighting the benefit of our well diversified operational and customer portfolio. We have reacted quickly to the challenges identified earlier in the year, taking action by identifying cost saving initiatives to protect margins and ensure the business is competitively positioned going forward."