Wincanton sets its sights on higher margin business

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Wincanton has set out its intention to improve margins by focusing on added value services such as streamlining customers’ supply chains and providing systems capabilities for multi-channel retailing.

In its half year results, the 3PL said: “The greatest challenge in terms of achieving profitable growth lies in areas of the contract logistics business such as the traditional retail and consumer goods contracts and the more mature milk and fuel tanker operations. At the extreme, the basic open book warehouse contract is a commodity service and margins have declined year on year.

“While these services continue to be an important part of our business mix we will focus on driving margin improvements by adding value through additional services, streamlining our customers’ supply chains or providing systems capabilities that will help them manage challenges presented by multi-channel retailing.”

The group has decided to withdraw from its loss-making foodservice business.

And it  has been disposing of its continental European businesses to focus on the UK and Ireland where it aims to achieve “a clear leadership position”.

First half sales in the ongoing business amounted to £625.4m – down from £680.8m last year, while operating profit fell from £25.1m to £22.3m.

The group said: “Overall margins at 3.6 per cent are broadly consistent with the equivalent six months last year (2010: 3.7 per cent) and the 3.5 per cent for the full year ended March 2011.”

First half sales in the discontinued continental businesses amounted to £415.6m while operating profit was £4.3m.

New business wins during the first half amounted to some £135m. However, it said:  “The major variances in the UK & Ireland half year’s performance have been within our Foodservice business (£2.2m adverse year on year) and as a result of the disposal of Recycling in August 2010 (£1.1m adverse).

“We made good progress in winning and renewing business, but these positive steps have been offset by reduced volumes in the Container logistics sector and by two retail customers going into administration.”

The restructuring work meant that the group produced a pre-tax loss of £75.5m for the first half compared to an £11.7m profit in the first half last year.  

[asset_ref id=”1347″]  Eric Born

Eric Born, chief executive, said: “We have made good progress in the execution of the structural aspects of our strategy to exit from Mainland Europe and to improve shareholder value. We are now well positioned to focus on the operational aspects of our strategy and to build on our reputation for service excellence in our core UK & Ireland market. Through the delivery of operational efficiencies and contract wins we expect to continue to build on the strong, underlying profitability of our UK & Ireland business.”

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