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Mixed pidure for Wincanton
Page 20
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VVincanton has boosted its turnover and profits, and has grounds for optimism. But it faces some challenges over the next few months.
wAisiiaaai Chris V organ, Automotive & Logistics Datamonitor
Wincantan has published its financial results for the six months to 30 September. Revenue Increased by 5.9% year on year to £931.8m. operating prof it was up by 7% to £21.4m, helped by a lot of new business.
The company forecasts further operational and strategic progress over the full year, but the figures reveal a mixed picture.
Wincanton's core market, the UK and Ireland, has continued to improve. Turnover remained flat at £575m but operating prof it rose by 10%, to £20m. This momentum is likely to be sustained for the rest of the year. helped by a five-year 2900m contract with Somerf ield.
Two recent domestic purchases, RDL Holdings and the Lane Group, will strengthen the company's position in the construction and home-delivery markets.
However, results from the Continent were not so encouraging. While revenue improved by 17% to £.356.7m, operating prof it fell by 22% to £1.4m due to a shortage of subcontractors, continuing losses in the Spanish operations and lower-than-expected results from a new contract in Central Europe Things are expected to improve in the second half of the year because of opportunities in the French and Central European markets. Nevertheless, the company still faces substantial challenges. The first is a trend that is affecting the whole logistics industrypoor margins. While Wincanton's operating profit has risen, total operating margin is still only 2.3%, and just 0.4% on the Continent.
One cause of this is the fragmentation in this sector. A Datamonitor report. Logistics Benchrnarking and Profiler 2W6, shows that only one company, DHL-Exel, holds more than 5% of the global contract logistics market. Also, transport costs have come under pressure from rising oil prices though some firms have been able to pass the additional expense onto their customers.
VVincanton also faces two company
specific issues. The first is its continued reliance on the domestic market for the majority of its revenue. Although this proportion has fallen year on year, it still stands at over 60% and is set to rise with its two new acquisitions.
The second factor is the ongoing disruption in its Spanish operation, both in terms of finance and in the amount of management time spent on resolving the situation_ Consequently although VVincanton's latest results show the company is heading in the right direction, there are still challenges that need to be tackled in the near future, • Contact: www.datamonitor.com