Wincanton sees profit fall in H1 2023 as it continues to exit closed book contracts

Wincanton saw profit plummet by almost a fifth and revenue fall by 8% in the first six months of this financial year, which the haulier attributed to the group’s strategy to shift out of closed book transport contracts, ongoing inflationary pressure, rising interest rates and weakened consumer confidence.

According to its unaudited half year results to 30 September 2023, the group delivered revenue of £694.7m, compared to £753.6m in the same period in 2022. The group said the 7.8% revenue fall reflected its strategy to move away from closed book transport contracts and towards digitally enabled 4PL solutions.

Excluding closed book transport contracts, revenue fell by 3.7% in the half year, whilst pre-tax profit lurched downwards by 19.3% to 22.6m (H1 2022: £28m).

In better news the group announced a milestone agreement reached with the Defined Benefit Pension Scheme Trustees for the March 2023 triennial valuation. The last contribution to scheme was made in July 2023, which the company said unlocks “significant” free cash flow. The company has also launched a £10m share buyback programme, under a new capital allocation framework.

Highlights listed by the group for the period include Wincanton’s continued automation drive which has seen the launch of a robotic cross dock solution for a  “leading” UK retailer and a  reorganisation of transport which the company said has been delivered at pace with a focus on developing digitally enabled 4PL services.

Wincanton also announced “significant” growth in open book managed transport services which has seen the launch of its Sainsbury’s contract, alongside previous winswith retailers New Look and Primark.

Other new business secured during the half year includes deals with Segen, Jet2 and The Conran Shop and the renewal of contracts with clients including the LVMH Group-owned Sephora and Williams Sonoma. The company added that it has a total sales pipeline of £1.5bn which it said reflects “scale of organic opportunity in the logistics market.”

James Wroath, Wincanton chief executive, said: “We have delivered a resilient performance during the first half of the year despite a macro-economic backdrop characterised by persistent inflationary pressure, elevated interest rates and weakened consumer confidence.

“The group made the decision to exit closed book transport contracts and proactively changed the focus of our business and I am pleased with the progress we have made on those strategic objectives.

“We continue to invest in supply chain automation, transport optimisation and operational excellence. As reflected in our new capital allocation framework and the confidence of the Board, we are maintaining our dividend year on year and returning value to our shareholders through a share buyback programme.

“Our people are the bedrock of our business and I would like to thank our 20,000+ colleagues, who continue to provide exceptional service to our customers and deliver supply chain value every day.”

Looking ahead the company said it  expects retail volume pressure to persist in the near-term, “reflecting the challenging macro-economic backdrop.” It added: “Despite this, the group’s diversified sectors, commercial discipline, and customer relationships ensure that Wincanton is well positioned to deliver on its strategic ambitions.

“Strong cash generation and the result of the 2023 pension triennial valuation will help accelerate the group’s investment in sustainable and margin accretive growth and enhance shareholder returns. The Board remains confident in the Group’s strategy and expects to deliver revenue and profit in line with market expectations for FY24.”