Business momentum strong, says Wincanton

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Wincanton has delivered an upbeat assessment of its business prospects in its interim  management statement.

“In the UK & Ireland, new business momentum remains strong, both in traditional markets and in newer sectors and services, including some of those affected by volume weakness in the second half of last year. Group financial performance is benefitting from the effects of cost reduction initiatives,” it said in the statement which covers the period from the start of its financial year (1st April) to 20th August.

“Good progress is also being made towards the renewal of our banking facilities. Cash management remains a key area of focus and the group is trading comfortably within the covenants of our current facilities.

“We expect a stronger performance in the second half as a result of action taken to reduce costs and exit businesses not delivering acceptable results. Overall, we expect new business and market share gains, based on the quality of our existing customer and contract portfolio and the encouraging progress being made in our newer sectors and services, to contribute well.

“While uncertain economic conditions offer less visibility of the short-term trading outlook, the Group remains focused on delivering a performance in line with expectations in the current financial year.”

Since the year-end, the group has decided to focus resources on its dedicated home delivery services – “an area in which we continue to win new contracts, and to close our more volume-sensitive shared-user home delivery services”.

Contract gains in the new financial year include Argos, Micheldever, the addition of Strada in the food service operations and seasonal business with Sainsbury’s. Further business gains have also been confirmed in food service, as well as in other areas such as defence, home delivery and general merchandise retail, although formal contracts are still under negotiation.

In continental Europe, contract gains and cost reduction initiatives were also mitigating the effects of volume decline, it said, “but we expect economic conditions to continue to present challenges”.

“A key area of focus continues to be the loss-making German groupage activities. Plans to eliminate these losses are progressing well and are expected to be implemented before the end of the calendar year.”

New business wins since the year-end in Mainland Europe include the pan-European distribution and installation of in-store technology for Rodenstock, the eyewear manufacturer and a further contract with brewer InBev in Holland. Goodyear also awarded Wincanton contracts in France, Poland and Belgium adding to existing business in Germany and Central and Eastern Europe.

“As the European No 2 in supply chain services, building a presence in a growing number of industry verticals and with an expanding range of support services, Wincanton is well-placed both to perform well relative to its competitors in the short term, and deliver renewed growth momentum in the medium to longer term,” the statement said.

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