Operating profit rose seven per cent at Wincanton to £42 million despite some pressure on margins.
Sales were up 9.6 per cent to £1.8 billion and the company said business wins and renewals totalled some £385m during the year.
Graeme McFaull who took over as chief executive from Paul Bateman at the end of last year said: “The year to 31 March 2006 was another year of profit growth and strong cashflow for Wincanton.”
Return on capital employed is becoming a critical issue for publicly quoted third party logistics providers. Wincanton said capital employed at 31 March 2006 was £122.9m, of which 35 per cent related to UK & Ireland operations and 65 per cent to continental Europe. “The return on capital employed, at 34.2 per cent represents an increase on last year’s 29.8 per cent. This rate of return is believed to compare favourably with the returns of our peer group.”
Chairman David Malpas said: “Our operations in the UK & Ireland reported underlying operating profit of £37.8m, up 3.6 per cent on the previous year. Fee pressure is evident in certain of the more mature areas of our activities but we continue to see opportunities for growth across our retail, manufacturing and industrial customer bases.
“The market for supply chain services in the UK & Ireland has become more polarised in recent years, and Wincanton, as one of the two leading operators, has benefited from its greater scale and the loss of market share by smaller operators. This trend is expected to continue to be of benefit to the group in the future. We also continue to have confidence in the growth potential of our portfolio of ancillary services, which includes consultancy, data records management, waste recycling and fleet maintenance.
Underlying operating profit on the continent grew by 7.1 per cent, excluding the French acquisition – including the acquisition it rose by 50.0 per cent to £4.2m.
“A more rapid and substantial improvement in the profit performance of continental Europe remains a key objective for us,” said Malpas.
Peter Brown, managing director of the group’s continental operations, left the company by the end of the financial year. Wincanton said a flatter, more flexible management structure was important to both the acceleration of the progress made to date in Wincanton’s continental European businesses and to the continuing development of the group as a whole.
Malpas said: “There is a high degree of operational leverage in our asset base which, if volume growth can be accelerated, will have a positive effect upon reported profit. Management teams have been strengthened in a number of countries, including the recruitment of a new managing director in Germany, and the new teams will be supported by higher levels of investment in marketing and business development.”