Wincanton has told investors that its full year turnover will be lower than 2018's, after the late start of a number of new contracts failed to offset its exit from several low margin deals.
In a trading update Wincanton said: “The strong wins achieved in the second half were too late in the year to mitigate the impact from contracts lost at the end of the previous financial year and first half of this year.
“However, the loss of the low margin contracts has positively contributed to an increase in the group's operating profit margin in the year.”
New customers won in the period include HMRC and Weetabix, as well as additional contract wins with existing customers such as Aggregate Industries and The Co-op.
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It added that contract renewals in the second half have included Asda, Valero and Marley, this with the new business wins, positions Wincanton well to deliver revenue growth in the year ahead.
Broker Liberum placed a buy recommendation on the shares after the “encouraging” update, stating that they remained undervalued at 227p (as this article was published).
The 3PL expects its profit to be in line with market expectations at just over £48m.
Wincanton will publish its preliminary results for the year ended 31 March 2019 on 16 May.
