-Profit warning sends shares tumbling 25%
- Pre-tax profit to be materially below consensus for the 2024 financial year
-Tougher consumer backdrop expected
Shares in logistics and supply chain company Wincanton (WIN) plunged 25% to 230p after warning pre-tax profit for the 2024 financial year running to 31 March would be materially below market estimates.
The shortfall relates to the loss of a contract with HM Revenue and Customs (HMRC) which will be transferred by June 2023 after a retendering process.
The company said it was extremely disappointed after delivering a ‘well-executed implementation delivered in exceptionally shortened timescales and acknowledged strong performance over the past two years’.
Management was keen to highlight the company remains a strategic commercial partner to other government departments with major contracts across HMRC, Defra, the Department for Health and Social Care and the Cabinet Office.
WHAT IS THE FINANCIAL IMPACT?
In addition to the lost contract management see a more challenging environment in fiscal 2024 including an accelerated fall in consumer spending and volumes.
Consequently, pre-tax profit is expected to be materially below consensus analyst’s expectations which the company says is £63 million.
The wording suggests at least a mid-double-digit percentage shortfall in profit which would imply a pre-tax profit in the region of £53 million.
Analyst Steve Woolf at Numis downgraded his 2024 earnings estimates by 20% to £51 million.
He said: ‘Despite these short-term headwinds we believe the fundamental investment case remains unchanged, with significant opportunities for further contract wins, organic investment and the development of robotics and automation solutions for its customers.’
For the year to 31 March 2023 the company confirmed it expects to trade in line with expectations and anticipates revenue growth of 3% and pre-tax profit growth above 5%.
Looking forward the group said it continues to see ‘significant’ growth opportunities across both e-fulfilment and public and industrial sectors.
