Distribution and logistics provider Wincanton (WIN) posted a strong increase in first half sales and earnings thanks to new customer wins and contract extensions, lifting the shares as much as 5% to 400p in early trading.
Revenues for the six months to September were £690 million, up 19.3% on last year which was heavily impacted by the disruption caused by Covid, but more significantly up 16.4% on the same period in 2019.
Pre-tax profits were also ahead of 2019 levels, rising nearly 43% to £27.3 million and allowing the firm to raise the interim dividend by 40% to 4p per share. The interim pay-out is usually one third of the annual total.
ECOMMERCE BOOM
Thanks to the continued growth of online shopping, the firm’s Digital and E-Fulfilment business saw revenues jump more than 50% in the first half.
One highlight was the new ‘dark store’ customer fulfilment centre which the firm set up for Waitrose and which is already processing 13,000 orders a weak with the peak Christmas trading period still to come.
There were notable contract renewals and extensions with major customers including Asda, BAE Systems (BA.) and IKEA, as well as the UK government, while new customer wins included Lakeland, Primark - part of Associated British Foods (ABF) - and French industrial firm Saint Gobain.
Also, the state-of-the-art E-Fulfilment centre in Rockingham has picked up new business from long-standing customer B&Q, owned by Kingfisher (KGF).
Meanwhile, the Cygnia acquisition announced in September will expand Wincanton’s presence in the small- and mid-cap customer segment, accelerating its growth prospects.
While driver shortages and rising wages have had some impact on its business, the company has been able to pass through the increase in costs to most of its clients on so-called closed-book contracts and exited agreements which are no longer commercially attractive.
TECHNOLOGY FOCUS
There is a clear focus on technology in the first half update, starting with the implementation of a new finance and HR system based on Oracle Cloud which was rolled out on time and on budget.
The fully automated Rockingham site has already wowed customers and includes an innovation centre which demonstrates the firm’s development of autonomous mobile robots, wearable technology and AI to improve efficiency and accuracy in its facilities. It is also working on digital solutions to support recruitment, asset tracking and warehouse performance management.
The firm is even working with the Department for Transport to assess the economic and technical potential of developing an ‘eHighway’, using data from its truck movements on the M8 and M180 in a study to assess the possibility of on-the-road charging of battery-electric goods vehicles through overhead electrification.
