Winning new contracts ranging from running clothing retailer Primark’s warehouse-to-store transport operations to storing PPE for the government, along with the boom in home shopping, have set logistics group Wincanton on the way to stronger revenue growth.
In a trading update to shareholders, the Chippenham-headquartered group said revenue in its fourth quarter was expected to accelerate by more than 13%.
Its eFulfilment business has been the group’s star performer due to the huge rise in online shopping and home deliveries sparked by the pandemic.
Revenue from the business for the year ended March 31 is due to have soared by 56%, in part driven by its acquisition last September of eCommerce fulfilment specialist Cygnia.
Wincanton paid £23.9m for Cygnia, which works with high-profile consumer-facing brands such as BrewDog, Moonpig, Molton Brown, Revolution Beauty and Whittard of Chelsea.
It said Cygnia had now been integrated into the business and the combined business was already generating a healthy pipeline of prospects.
“Online volumes continue to be influenced by the public response to the relaxing of pandemic restrictions as high street sales return, however the medium-term outlook for online eFulfilment remains strong,” it added.
Meanwhile the five-year contract with Primark to operate its transport services to all its UK stores, is expected to help boost revenue in the group’s two retail sectors – grocery and consumer and general merchandise – by 17%.
The contract has involved securing 160 pieces of transport equipment and recruiting or transferring 96 drivers in a move Wincanton said demonstrated its “capability to seamlessly deliver contracts of this scale”.
Its public and industrial business was expected to show year-on-year growth of 18% for the full year. As well as being appointed during the year to run a new DEFRA site in the Sevington Inland Border Facility, the group had secured a further contract to process and store PPE on behalf of the government. This involves sourcing 330,000 sq ft of storage space.
Wincanton also said it was steering clear of two major issues for the distribution industry – a shortage of drivers and spiralling fuels costs.
The group, which has a 20,000-strong workforce and operates from more than 200 sites across the country, said the driver and labour shortages had stabilised following the peak activity in the last quarter and, as a result, it had increased its drivers by 260 to 5,360.
It said it was also largely protected from the recent increases in fuel prices through the structure of its contracts, although it said it continued to work closely with customers to manage these cost pressures.
Wincanton chief executive officer James Wroath said: “Wincanton has delivered a strong final quarter performance, maintaining the positive momentum we have seen throughout the year and with all four parts of the business contributing positively to our growth.
“We continue to deliver against our strategy, with significant growth in our focus markets of eFulfilment, public and infrastructure, and we are well placed to capitalise on the opportunities we have ahead of us in the coming year.”
The group is due to announce its full-year results on 20 May.
