News / Wincanton sees profits rise as 'the Adrian Colman era' comes to an end

16/05/2019

Wincanton raised its profit at around the same rate it lost revenue during its fiscal year 2018.

Despite a 2.6% decline in turnover, to £1.14bn (£1.17bn a year earlier), profits (recorded as ebitda) climbed 2.9% to £66.7m.

Outgoing chief executive Adrian Colman said “key areas” had grown, including retail general merchandise.

“In the second half of the year, we secured substantial new contract wins that should position the group well in the coming periods,” he added.

“Revenue performance overall in the year was impacted by the loss of certain contracts at the end of the previous financial year and the first half of this year.”

Even so, he noted, the company had been “disciplined” in its contract selection and had implemented performance improvement and cost management initiatives across the group.

There were further benefits, he said, following restructuring in the previous 12 months, all of which had combined to deliver profit growth.

He added: “We’ll continue to develop leading capabilities to enhance excellent customer service and operational delivery, enabling us to make further progress in the years ahead.”

As Mr Colman retires he will be replaced by Lufthansa subsidiary LSG Sky Chefs’ chief operating officer for North America, James Wroath who will take the reins in October. The Loadstar’s financial analyst, Alessandro Pasetti, suggested the change may reignite talk of breaking up the business.

“While arguing one year ago that break-up talk was just noise, the allure of a fully fledged takeover now is undeniable,” notes Mr Pasetti on The Loadstar Premium today.

“It’s an end to the Adrian Colman era; he did a great job continuing the outstanding work of Eric Born… so this change of leadership, could facilitate a change of ownership.”

It seems once again the Industrial & Transport division proved problematic for the company, but even with a near-10% plunge in revenue to £432.6m, profit climbed 3.9% to £24.2m.

Mr Colman said declining divisional revenues were the result of a reduction of activity levels in “a number of lower-margin areas”, including with Britvic and Tarmac.

“[But we still retained] these important customers in areas where we can generate value for them and us,” he said. “This proactive approach to contract management, alongside actions to reduce cost base and right-size areas of capacity has resulted in an increase in underlying operating margin.”

The Retail & Consumer division strength remains clear, spearheaded by a 9% spike in retail general merchandise revenue, accounting for £424m of the division’s £709m revenues.

Much of the success was thanks to new contract wins, including from Ikea, Wilko and Wickes, which Mr Colman said had helped offset the loss of Premier Foods and Tesco.

Activist investor Gatemore Capital – which last year was vociferous in its demands for the company to be broken up – seemed pleased with the progress of the last 12 months. Chief investment officer Liad Meidar said: “Today’s results show Wincanton continuing to move in the right direction, and we support changes spearheaded by the new chairman, which should position Wincanton for further success.

“The market seems to be catching on, with Wincanton dramatically outperforming peers in the logistics sector over the past year.”