Wincanton articles Mch 03 – Aug 03

INVESTORS CHRONICLE 8th August 2003
WINCANTON HIT BY EUROPEAN HEAT WAVE

Sweltering temperatures in Europe are causing problems for logistics company Wincanton. Low water levels on the Rhine are hitting Rhenania, a Rhine barge subsidiary bought with P&O's Trans-European business last December."Yes, it's having an effect," says Charles Carr, Wincanton's director of marketing and communications. "As the river gets shallower, you can get less cargo on board, so productivity goes down and prices go up." However, in Europe, it isn't easy to pass higher costs on to customers.Mr Carr says problems on the Rhine aren't out of the ordinary, but suspicious analysts – still luke-warm about the Trans-European acquisition – think it could be used to excuse deeper-seated problems elsewhere within the businessICView – Rhenania is under one-tenth of Wincanton's business, so any impact shouldn't be too significant. Results in June showed Wincanton dealing well with the European operations, but further problems shouldn't be ruled out. Fairly priced.Copyright 2003 Investors Chronicle.

LLOYDS LIST 1st August 2003
WINCANTON CLINCHES RHINECONTAINER SHARE

Wincanton, the UK-based European logistics group, has become a majority shareholder in Rhinecontainer, the Dutch-owned barge operator.Rhenania Intermodal Transport, a wholly-owned German subsidiary of Wincanton, has increased its share in Rhinecontainer from 42.8% to 74.2%.The increased shareholding was acquired for an undisclosed sum from EWT Holdings.Rhinecontainer is now owned by Wincanton Rhenania and giant German forwarder K'hne ' Nagel, which holds the remaining 25.8 % stake.In November last year, Wincanton and the UK arm of K'N created a 50-50 joint venture designed to support UK retailers who regularly source goods from overseas.Rhinecontainer employs 30 people and has offices in Belgium and the Netherlands. The container barge fleets comprises 24 modern units.The deal increases Wincanton's focus on inland European multimodal supply chains after buying P'O's European contract logistics business for GBP152.5m ($245m) last December.Rhinecontainer has an estimated 26% market share in container barge transportation on the river Rhine and carried more than 300,000 teu last year.The company is also becoming increasingly involved in waterway transport between Belgium and Dutch seaports as well as inland terminals.Peter Brown, Wincanton's managing director Europe, said: 'This step results in a more seamless service covering the container barge activities of Rhinecontainer and terminal services in the hinterland, where Wincanton Rhenania operates six terminals.'Copyright 2003 Lloyds List. Source: Financial Times Information Limited – Europe Intelligence Wire.

AFX UK FOCUS 24th July 2003
WINCANTON SAYS CURRENT TRADING CHALLENGING BUT PERFORMANCE BROADLY IN LINE

LONDON (AFX) – Wincanton PLC said current trading is challenging, but performance to date is broadly in line with its expectations.Victor Benjamin, chairman, said: "We expect a year of good progress towards our strategic objectives."He added that the integration of the company's recent acquisition continues to progress according to plan and new business enquiries are at a very encouraging level.In January, the Office of Fair Trading cleared Wincanton's acquisition of P&O Trans [email protected]

INVESTORS CHRONICLE 20th June 2003
WINCANTON (WIN)

Wincanton helped soothe some frayed nerves with these results. In December, it bought P&Os European logistics business. The deal had the potential to blow up in its face – parts of the new business were loss-making and the European logistics industry was in steep decline. However, so far the evidence points to Wincanton coping well with the potential pitfalls. Profits are improving in the European business and operations in Germany – potentially the biggest black hole – have returned to break even. To bring about these improvements, Wincanton has got tough with both suppliers and customers and has started to use its assets more efficiently.Part of the rationale for the deal was to win broader pan-European contracts and Wincanton is already having some limited success. It is using its traditional UK skills in automated warehousing to bid for just such a contract in Germany. Integration is on schedule, although restructuring costs are already GBP900,000 more than originally predicted.The key threat is the state of the European economy. Unsurprisingly, margins in the existing business are already under pressure and further economic deterioration could scupper the good work done so far. Thats a real worry, because the contracts that came with the P&O business demand that Wincanton takes on a higher degree of risk than it used to previously.Analysts forecast underlying pre-tax profits this year of GBP38.3m (GBP32.3m last year), giving EPS of 19.9p (16.9p).Ord price: 199pMarket value: GBP229mTouch: 197-201p12-month High: 234p Low: 141pDividend yield: 5.1%PE ratio: 11Net asset value: 15p*Net debt: 605%*Includes intangibles of GBP25m, or 21p a shareYear toTurnoverPre-taxStated earningsNet div per31 Mar(GBPm)profit (GBPm)per share (p)share (p)200172223.414.29.00200274630.819.29.45200399826.717.510.10% change+34-13-9+6Last IC view: 20 Dec 2002, page 69xd: 16 Julpd: 13 AugCopyright 2003 Investors Chronicle.

LLOYDS LIST 16th June 2003
WINCANTON GETS TO GRIPS WITH COSTS

Six months after the GBP152m acquisition of P'O's Trans European logistics business, Wincanton has embarked on a detailed analysis of transport cost savings.'The tactics may change when you get down to the priorities of your hit list, but the strategy was always the same,' says Paul Bateman, chief executive of Wincanton.'We will target the problem areas and do not intend to sit around. We will do whatever is needed, and will not wait for an economic recovery to deliver us a profit.'One of the first targets, in the Trans European heartland of Germany, was to reduce the rates for sub-contracted hauliers and to eliminate volume guarantees for truckers, underwritten by the previous management.In its preliminary results issued last week Wincanton continued its faint praise of P'O management style for the newly acquired business that employs 7,000 people in 200 sites across 15 countries.In the prelims statement Mr Bateman said: 'In addition to the good operational progress already made, we have also begun to extend Wincanton's financial disciplines to the acquired businesses.'Again, this is a process that will take time to implement in full.'We are confident, however, that increased focus on areas such as working capital and capital expenditure will improve the cash flow profile of the Trans European operations.'The costs of restructuring the new business, put at GBP2m in the December advisory note to Wincanton shareholders, has risen to GBP2.9m ($4.7m), mainly associated with changes in the British operations..Said Mr Bateman: 'This charge is expected to enable us to deliver cost savings in excess of the GBP2m per annum within 18 months of acquisition also described in the circular. Further restructuring charges are also likely in the current year.'The lean and mean approach to European road haulage will be applied to British operations by a Wincanton manager who has successfully undertaken similar reviews at depot level.His first task will be to look at the GBP50m of outsourced haulage to see where this can be replaced by overlapping routes and empty backhauling by the company's own trucks.Wincanton is obviously pleased with the acquisition of a profitable business that enjoyed significant latter-day investment from P'O.The European business brought a considerably asset-based operation with its fair share of warehouse property that was acquired on a build first, fill it later basis.Wincanton does not work that way, and is quick to act. Through Trans European it acquired a small-scale rail freight operation in Germany, where it has reduced the frequency from daily to three times a week, until volumes and rates pick up.In the UK, where Wincanton has a joint venture with K'hne ' Nagel, there is now talk of using rail freight out of the ports.It is clear that there are some issues around operational costs and margins for selected footprints of the European division.The acquired business, in its slow trading January to March period, contributed GBP2.2m of adjusted opera- ting profit on turnover of GBP185.9m, giving a margin of 1.2%.The low margin is 'a function of their currently lower levels of contract-based activity and weaker economic conditions in certain continental European countries,' says Wincanton.But the core Wincanton UK business reported a 4.7% increase in adjusted operating profit to GBP31.1m on turnover up by 8.9% to GBP812.1m.The mood of the Trans European team at last month's Munich logistics conference was optimistic enough.They have an owner focused on logistics, with a firm but fair mangement approach and a blue chip customer base demanding integrated supply chains.For a costs-focused Wincanton, the opportunity to grab an appreciable European foothold warts and all was too good to miss.It is now number two in the British contract logistics business and number three on the mainland.Wincanton reports that the cross-fertilisation has already begun, with existing and new British clients asking for mainland logistics cover while Trans European customers are asking for the reverse.The litmus test will be translating that interest into solid business wins, although there seems little doubt about that given the Wincanton pedigree.Copyright 2003 Lloyds List. Source: Financial Times Information Limited – Europe Intelligence Wire.

FINANCIAL TIMES UK 13th June 2003
COMPANIES UK: WINCANTON DELIVERS A SURPRISE TRANSPORT:

Wincanton, the logistics group, yesterday reported adjusted annual profits of Pounds 28.3m, slightly ahead of consensus expectations of Pounds 28.1m.Turnover was up substantially, from Pounds 745.6m to Pounds 998m, largely thanks to the Pounds 152.5m Trans European acquisition in December. On a pre-tax basis, profits reached Pounds 26.7m (Pounds 30.8m), after exceptionals of Pounds 5.3m (Pounds 400,000).The acquisition, which was financed by debt, drew criticism from analysts, who suggested the management team did not have the experience for such a continental move.But yesterday, Paul Bateman, chief executive since the autumn, said integration was going well and that annual cost savings would exceed the Pounds 2m target, although he would not be drawn on how much.He said further growth would come from new business. It won Pounds 100m last year, mainly from offering existing customers new products. "That pipeline is growing," he said.He also said that while the German economy was flat, it was much bigger than the UK economy and stressed that the results showed it was possible to operate profitably there in the current climate.Despite lower earnings per share of 17.5p (19.2p) after a higher tax charge, the board recommended a 7 per cent rise in the final dividend to 6.75p, making the total 10.06p (9.45p).FT Comment* The logic of the Trans European deal might initially have been lost on some observers but they have worked it out now. Integration is going well and there is also scope for margin improvement and the possibility of asset sales to help bring down debt. While analysts left their numbers unchanged, investors should not see this as a sign that there is no upside in this company. Next year, they are looking for Pounds 33.9m, putting the shares on a forward p/e of nearly 9, which could justifiably be higher now that the acquisition has demonstrated its worth.Copyright © 2003: Financial Times Group

LLOYDS LIST 13th June 2003
WINCANTON STARTS COST CUTTING IN GERMANY

WINCANTON, the UK's second largest logistics provider, has started cutting haulage costs from the German arm of its GBP152m ($247m) pan- European acquisition from P'O.The company, in charge of Trans European since last December, has reduced the rates for sub-contracted German truckers while removing volume guarantees.A similar transport review will be repeated by Wincanton in the UK, focusing on its GBP50m worth of annual third party trucking in the domestic market.Wincanton announced its haulage efficiency drive after reporting a fall of 13% in pre-tax profits, after exceptionals, to GBP26.7m for the 12 months ended March.But adjusted pre-tax profit, before exceptionals, was up 9.7% at GBP28.3m.Turnover on core Wincanton operations, without Trans European, went up 8.9% for the year to GBP812.1m, with an operating profit 4.7% higher at GBP31.1mInclusion of the asset-heavy British and continental multimodal business saw turnover up 33.9% at GBP998m, with a combined operating profit of GBP33.3m.The exceptionals included a GBP2.9m restructuring charge for the P'O acquisition higher than the GBP2m estimated to shareholders last December relating to 'rationalisation of the United Kingdom operations'.Wincanton chief executive Paul Bateman said: 'This charge is expected to enable us to deliver cost savings in excess of GBP2m per annum within 18 months of acquisition.'Further restructuring charges are also likely in the current year.'Wincanton took a further exceptional charge of GBP2.4m after deciding to 'substantially write down the book value' of its investment in a series of supply chain software modules.Although the software was tested with a number of customers, the programme was never installed by Wincanton.'We are in discussion with the vendor to seek to recover the costs of our investment,' said Mr Bateman.He became chief executive of the company in October after joining from the Tesco supermarket chain.He added: 'The acquisition of Trans European has changed Wincanton from a strong player in its national market into one of the leading supply chain management companies in Europe.'We have much to do to deliver the full potential of the enlarged group.'But I believe that the acquisition has significantly enhanced Wincanton's prospects for sustainable, profitable growth.'Although performance improvement in Continental Europe will take longer to deliver than in Britain, early signs of the potential for both increased efficiencies and new business opportunities are encouraging.'Mr Bateman said that Wincanton, before the acquisition, had added approximately GBP100m of annualised turnover through new business wins.This had mostly been with existing customers.Further pan-European tenders are in the pipeline thanks to the Trans European takeover.In its results announcement Wincanton stated that the consideration of GBP152.5m paid to P'O for the Trans European operations was 'subject to potential adjustments arising from the preparation of completion accounts as at December 3l, 2002'.Those accounts include the GBP24.3m assessment which is at present placed on the goodwill associated with the Trans European acquisition.Mr Bateman added: 'These accounts have yet to be finalised with the vendor.'Copyright 2003 Lloyds List. Source: Financial Times Information Limited – Europe Intelligence Wire.

BIRMINGHAM POST (UK) 27th March 2003
WINCANTON'S PROGRESS ON INTEGRATION

Logistics group Wincanton is making good progress in integrating its pounds 152.5 million acquisition Trans European into its network, chief executive Paul Bateman said.Annualised cost savings flowing from the December takeover of Trans European from P&O were on target and further potential economies had been identified, he noted in a pre-close season trading update.Somerset-based Wincanton, which has a wide spread of operations in the West Midlands, paid cash for Trans European and predicted savings of pounds 2 million a year within 18 months of the deal.The company said yesterday that economic conditions 'remain challenging' but added: 'However, against this background, the group's operations have been performing broadly in line with expectations.'Mr Bateman said: 'The Trans European acquisition represents a major strategic step forward for Wincanton. We have made solid progress on business integration and are working hard to deliver the growth potential of the enlarged group. Despite the difficult economic conditions, we have great confidence in its future.'Shares closed up 1p at 143.5p.Copyright: MGN Ltd

AFX UK FOCUS 26th March 2003
WINCANTON SAYS OPS HAVE PERFORMED BROADLY IN LINE WITH EXPECTATIONS IN FY

LONDON (AFX) – Logistics and distribution group Wincanton PLC said its business performed broadly in line with expectations in the year to March despite a challenging economic environment and added that the integration of its recent Trans European acquisition has so far been rapid.""Rapid progress has been made towards the integration of Trans European's UK business with Wincanton's existing operations," said chief executive Paul Bateman."Annualised cost saving targets will be met within the board's original timetable and opportunities to deliver further savings are anticipated. Good progress is also being made in the assessment of actions required to improve the performance of certain continental European operations."[email protected]