Wincanton reports a resilient trading performance in line with market expectation
Wincanton plc, a supply chain partner for UK business, today announces its half year results for the six months ended 30 September 2023. Trading in line with market expectations
· Revenue of £694.7m and underlying profit of £22.6m, in line with expectations
7.8% revenue reduction from prior year reflecting the Group’s strategic shift out of closed book transport contracts and towards digitally enabled 4PL solutions
Excluding closed book transport contracts, revenue is down 3.7%
·Strong free cash flow generation of £24.5m with disciplined cash management resulting in an improved H1 net cash position of £15.6m
·Interim dividend of 4.4p at the same level as prior year
·Milestone agreement reached with the Defined Benefit Pension Scheme Trustees for the March 2023 triennial valuation; last contribution to scheme made in July 2023, unlocking significant free cash flow
·New capital allocation framework developed, including launch of £10m share buyback programme
·Continued automation transformation with launch of robotic cross dock solution for leading UK retailer
·Strategic reorganisation of transport delivered at pace with focussed investment on digitally enabled 4PL services
·Significant growth in open book managed transport services with implementation of Sainsbury’s contract, alongside previous wins with New Look and Primark
·Further new business secured with Segen, Jet2 and The Conran Shop and key renewal with customers such as LVMH Group-owned Sephora and Williams Sonoma
·Total sales pipeline of £1.5bn reflecting the scale of organic opportunity in the logistics market
James Wroath, Chief Executive Officer of Wincanton commented: “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.”
We expect retail volume pressure to persist in the near-term, reflecting the challenging macro-economic backdrop. 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.