Wincanton has issued a profits warning after losing a major contract with HM Revenue and Customs (HMRC), following a retendering process.
The five-year contract, first awarded to Wincanton in 2019, had an estimated value of £71m. It involves the provision of logistics services to support UK customs operate and establish inland depots and storage locations for imported goods for sea, air, road and rail freight.
In a trading update the Wiltshire-based firm said it was “extremely disappointed” to lose the HMRC deal following a “well-executed implementation” which it said the group had delivered in “exceptionally shortened timescales”, also noting that it has delivered an “acknowledged strong performance over the past two years".
The loss of the HMRC contract comes as a blow to the company which is already battling the economic stresses that Brexit, the Ukraine War and the cost of living crisis have delivered.
The group said: “Alongside the loss of this contract, and as previously announced, Wincanton continues to expect a more challenging external environment in the coming financial year, including an accelerated reduction in consumer spending and customer volumes.
“The combination of these factors will impact financial performance in FY24. The group now forecasts a reduced profit before tax for FY24 materially lower than current market consensus.”
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On a more positive note, the trading update said that the group continues to see significant growth opportunities across both the e-fulfilment and public and industrial sectors, alongside its core and “resilient” general merchandise and grocery and consumer sectors.
The update added that Wincanton will continue to develop its automated warehouse and transport technology, which it said will “significantly” increase the value the business over the medium term. The group said it also remains confident in its strategy and its ability to deliver sustainable growth.
The haulage group, which is based in Chippenham, also remains a strategic government commercial partner with major contracts with HMRC, Defra, the Department for Health and Social Care and the Cabinet Office.
Wincanton is due to publish its annual results for the year to 31 March 2023. In the trading update the group said it had continued to trade in line with expectations in the period and anticipates delivering revenue growth of approximately 3% and profit before tax growth of over 5%.
It added: “This financial performance is despite the headwinds of inflation, labour supply shortages and consumer spending downturn. Working capital, cash and debt have been managed tightly and the group forecasts a net cash position at year end of between £0m and £10m.”