Wincanton trucks into home delivery
What a difference profit makes. Warehousing and delivery company Wincanton has just bought two companies with similar sales paying GBP 2 million for one and up to GBP 27 million for the other.
Lane, which delivers white and other household goods to your doorstep, fetched just GBP 2 million for its GBP 47 million of sales. Over-expansion had left the company making losses with debts of GBP 6 million which Wincanton (WIN) takes on.
Finance director Gerard Connell, who claims Wincanton is number two in logistics in the UK to Exel, says Lane provides a good ‘beach head’ to the fast-growing home delivery market. He admits home delivery companies have historically struggled to make money.
The other acquisition, RDL, specialises in delivering bricks and other building material for the likes of Hanson and Ibstock. In its last figures it made profits before interest and amortization of GBP 3.8 million on sales of GBP 57.6 million.
Connell says a number of big construction companies are expected to outsource their trucking and warehouse operations soon so there are plenty of opportunities.
Analysts expect the acquisitions to increase earnings a share by around 7 per cent and forecast pre-tax profits of GBP 35 million for 2006 and GBP 37 million for 2007 leaving the shares, flat at 317p, trading on a multiple of 14-15 times earnings for 2007.
Wincanton shares softened 0.25p to 316.75p.
