12 Jul 2023 07:00
12 July 2023
LEI: 213800Z5WTW8QKOHWQ82
WINCANTON PLC
("Wincanton" or the "Group")
Q1 Trading Update
Further strategic delivery against a challenging external environment
Wincanton plc, a leading supply chain partner for UK business, today provides an update on its trading performance for the three months ended 30 June 2023 ("Q1").
The Group continues to trade in line with market expectations[1], and has made sustained strategic and operational progress despite the ongoing economic headwinds and resultant lower delivery volumes. Group revenue in Q1 was down 4.5% year-on-year when closed book transport contracts are excluded[2]. Year-on-year revenue is 10.4% lower when including closed book transport.
Sector Performance
As set out in the Group's full year results, the strategic reorganisation in Transport was instituted to create a more profitable and digitally enabled service offering, alongside a more efficient allocation of capital. This offering is focused on the development, delivery and management of technology-based solutions and open-book dedicated networks. The Group is already seeing early benefits from this strategic shift, with new Transport Control Tower business for both Sainsbury's and Breedon. Our dedicated transport contract with New Look has commenced and our long-standing transport partnership with Halfords has been extended for a further five years.
The Group's foundation sectors continue to provide scale and strong cash generation in a challenging market. Revenue in Grocery and Consumer decreased by 5.6% year-on-year and General Merchandise was 16.9% lower, reflecting both volume reductions and customer churn.
Revenue from eFulfilment increased by 15.0% in the first quarter, demonstrating its importance as a growth driver. The Group secured several significant new eFulfilment contract wins in the quarter, all of which will commence in Q2. These contract wins include the expansion of the IKEA network partnership into Ireland and final mile delivery in Greater London, the UK launch of US home retailer Restoration Hardware and fulfilment services for Neom Organics and Brewers (Decorator Centres).
Revenue from the Public and Industrial sector increased by 2.1% year-on-year, with growth in our Defence customers and EDF Hinkley Point offsetting the reductions from the contracts with HMRC and DEFRA. The Group secured new contract wins in the key Defence and Industrial markets, expanding its partnerships with Rheinmetall BAE Systems Land and British Salt. The Public and Industrial sector includes construction closed book transport contracts. Where no protection exists, these transport contracts are being exited in alignment with our technology-based transport strategy.
Trading Outlook
Wincanton is well-placed to continue to navigate the challenging external environment with its successful strategy and continued investment in automation technology, underpinned by its diversified customer base. The Group's strategic shift in transport towards open book contractual agreements will deliver both financial and operational benefits.
The Group maintains a resilient financial position with a strong balance sheet and consistent cash generation. Management continues to actively engage with the Wincanton Pension Fund Trustees to agree an optimal contribution schedule in response to the ongoing triennial valuation and expects to provide a further update at half year.
-Ends-
For further information please contact:
Wincanton plc Tel: +44 1249 710 000
James Wroath, Chief Executive Officer
Tom Hinton, Chief Financial Officer
Headland Tel: +44 20 3805 4822
Susanna Voyle/ Henry Wallers
E: wincanton@headlandconsultancy.com
About Wincanton
Wincanton is a leading British supply chain solutions company. The Group provides business critical services including storage, handling and distribution; high volume eFulfilment; retailer 'dark stores'; two-person home delivery; fleet and transport management; and network optimisation for many of the UK's best-known companies.
The Group is active across a range of markets including food and consumer goods; retail and manufacturing; eCommerce; the public sector; major infrastructure; building materials; fuel; and defence. With almost 100 years' heritage, Wincanton's 20,300-strong team operates from 160 sites across the country, responsible for 7,400 vehicles.
[1] Market consensus for FY24 PBT of £50.4m
[2] Year-on-year revenue comparisons provided in this update exclude closed book transport contracts. When closed book transport contracts are included, year-on-year movements of: Grocery & Consumer -12.3%, General Merchandise -18.0%, eFulfilment +15.0%, Public and Industrial -15.3%