Wincanton finds progress remains slow

The UK-based contract logistics specialist Wincanton appears to have stabilised its business after the trauma of the past couple of years. Yet, with the company now reliant on the British economy, conditions remain tough.

For the past half year, Wincanton saw profits more or less flat, with an increase from £23.7m in the first half of 2012 to £24.2m in 2013, complicated by the effects of pension fund management costs. Revenue was down 1.6% year-on-year at £551.2m. On the bright-side, net debt is down significantly, but Wincanton’s big pension fund problem has worsened with its deficit up from £114.7m last year to £142.0m.

However, Wincanton continues to be one of the strongest players in UK contract logistics. Its business in construction increased 17%, whilst grocery retail logistics increased 10%. Other areas such as FMCG and tanker operations fell, yet margins seem to remain healthy at 4.5%. Wincanton claims to detect growth in the market, although the figures suggest that this is still modest. Nonetheless, Wincanton ought to be capable of benefitting from a wider economic recovery in Britain, although the worry must be that Wincanton might suffer rather than benefit from the huge impact of e-commerce on retailing.

Wincanton’s ‘specialist’ businesses did moderately well. Unsurprisingly, shipping container transport was a tough market, however its Pullman fleet service saw a significant fall in revenue as well. In contrast, the records management business grew modestly and it is likely that this is what underpinned the 10% increase in profits.

Although it continued to win significant contracts in areas such as fuel delivery and food, Wincanton complained of a highly competitive market-place driving down contract logistics prices with only strict cost control enabling margins to widen slightly. Overall, the company was somewhat pessimistic about the market, expecting little or no growth in its core retail business. This is a little surprising as certain parts of this sector are quite buoyant on the back of both UK and global demand.