Wincanton is looking for growth in the year ahead following a solid set of results for the year to 31st March, according to group finance director Adrian Colman.
Underlying operating margin, at 4.5 per cent, was up from 4.4 per cent in 2013-14, on revenue up 0.9 per cent to £1.1bn.
Reducing debt has been a key priority in recent years. Last year average debt was £136m, down from £168m the year before. In 2010-11 average debt was £270m.
Group finance director Adrian Colman, who takes over from Eric Born as CEO in August, said debt reduction would continue to be a priority but it was time to put more focus on growing the business.
About 60 per cent of Wincanton’s business is in the retail and FMCG sectors and Colman said he was keen to see growth with both existing and new customers.
He highlighted opportunities for Wincanton in the developing multi-channel and omni-channel retail environments, and pointed to the work it had already done with companies like Screwfix and Argos.
Colman also highlighted Wincanton’s strength in the construction market where is it already seeing growth.
Last year construction was the strongest performer in the contract logistics division with sales up 7.2 per cent to £135.2m. New business wins in this sector included Lavendon.
Sales in FMCG were up 4.7 per cent at £179.7m. However, grocery retail revenue was down 2.6 per cent at £237.4m, and retail general merchandise was down 4 per cent at £221.2m. Contract renewals included Waitrose, Britvic, Heinz and General Dynamic.
Underlying operating profit for the year was £44.8m, 17.0 per cent up on 2013-14. “The improvement in profitability primarily reflects a strong performance in relation to customer projects during the year and continued operational efficiency improvements from our on-going programmes across our major assets of labour, fleet and property.”
Revenue in the specialist business division was £178.6m, 6.4 per cent up on the previous year. But underlying operating profit reduced to £4.9m from £9.7m in 2014. This was attributed to losses suffered in the Pullman operation.
“Recent significant growth with a number of major retailers, reflecting the rapid expansion of their home delivery fleets, put pressure on the Pullman operating model and profitability as additional resources have been applied to manage the growth and the resultant increase in the breadth of operation.
“Additionally while the business has been successful at winning additional volumes these higher volume contracts have returned a significantly lower margin than the traditional core HGV fleet maintenance business with two contracts proving to be loss making.
“A provision has been made for these contracts in the 2014-15 financial year. Action has been taken to put in place a new management team in Pullman and to address the relevant commercial issues with these contracts to prevent a continuation of these losses beyond the 2014/15 financial year. We expect an improved level of performance from this business going forward.”
Group underlying operating profit was up 3.5 per cent at £49.7m for the year to 31st March. Financing costs fell from £22.4m to £18.3m. However, pre-tax profit was down from £34.9m last year to £24.9m. This was mainly due to a net pension gain that boosted last year’s figures.
CEO Eric Born said: “Wincanton has continued to deliver against our strategy in the year and achieved revenue and profit growth plus further reductions in net debt. This was attributable to continued operational excellence, delivering value added services and our focus on close customer relationships.”