Shareholders in logistics group Wincanton have been assured by its directors that it can manoeuvre its way through the current “challenging environment” by continuing to reshape the business and investing in new technology.
Revenue in the first quarter of its current financial year was down 10.4% year-on-year at the Chippenham-headquartered group, which has 20,300 employees and 7,400 vehicles in more than 160 sites across the country.
But in a trading update to shareholders, the group said it continued to trade in line with market expectations and had made “sustained strategic and operational progress despite the ongoing economic headwinds and resultant lower delivery volumes”.
It added it was well-placed to continue to navigate the challenging external environment with its successful strategy and continued investment in automation technology.
This was underpinned by its diversified customer base while a strategic shift in transport towards open book contractual agreements would deliver financial and operational benefits.
Wincanton, which performed strongly over recent years, benefitting from the huge increase in home shopping during the Covid lockdowns and the switch to e-fulfilment by major retailers, warned in a pre-close trading update to shareholders in March of a “more challenging environment”.
In its latest update this week it said the strategic reorganisation of its transport division was creating a more profitable and digitally enabled service offering alongside a more efficient allocation of capital.
“This offering is focused on the development, delivery and management of technology-based solutions and open-book dedicated networks,” it added.
It was already seeing early benefits from this strategic shift, it said, with new business for supermarket giant Sainsbury's and construction materials group Breedon, while a new dedicated transport contract with fashion store chain New Look had started and a long-standing transport partnership with motoring and cycling products retailer Halfords had been extended for a further five years.
Revenue in its grocery and consumer business decreased by 5.6% year-on-year and while general merchandise was 16.9% lower, reflecting, the group said, volume reductions and customer churn.
However, revenue from eFulfilment increased by 15.0% in the first quarter, demonstrating its importance as a growth driver, it added.
Several significant new eFulfilment contracts were secured in the quarter, including the expansion of the IKEA network partnership into Ireland and ‘final mile’ delivery in Greater London, the UK launch of US home retailer Restoration Hardware and fulfilment services for Neom Organics and Brewers decorator centres.
Revenue from its public and industrial sector increased by 2.1% year-on-year, with growth in defence customers and EDF Hinkley Point offsetting reductions from the contracts with HMRC and DEFRA.
