The boss of Wincanton says the 3PL has seen signs of the market hardening around price, as an increasing number of clients realise that the cheapest deal is not always the best.
Speaking after the publication of its half year results, Wincanton CEO Adrian Colman said the 3PL had sacrificed some top line revenue where the pricing of a contract hadn’t been right.
“It’s profit that really matters,” he said. “If you sign something low margin today, it will be no margin or even negative in two or three years’ time. We’re making sure that we don’t sign anything we’ll regret in 12 months’ time.”
Colman said that while it was his responsibility to expand the Wincanton business, it had to be the right sort of growth.
“I think in the last one or two years customers have moved away from simply being very keen on price.
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“There appears to be an understanding for many now that you need to pay more to guarantee a level of service.
Ultimately you’ll lose out on revenue if your provider can’t deliver, so there is definitely a realisation I feel that transport resource doesn’t just grow on trees,” he said.
Colman singled out Wincanton’s deal to provide warehousing and transport for the 10-year Hinkley Point nuclear power station build as a highlight in the period.
Wincanton is providing warehousing and logistics for the mechanical and engineering flow the project requires, with the demands similar to its defence work, which has included an aircraft carrier build in Scotland.
“We’re under way [on Hinkley] and it’s led to construction companies seeing us there and wanting our help on projects. We’re excited about its potential to unlock other work for us such as projects like HS2, Crossrail 2 and the Thames Tideway.”
Wincanton will pay an interim dividend of 3.6p per share.
Half-year results to 30 September 2018
Turnover £582m (2017: £581m)
Underlying operating profit £27m (2017: £25.7m)
Pre-tax profit £30.1m (2017: £20.3m) *
*includes a £6m exceptional gain of the sale of a Corby freehold to Iron Mountain.
