Wincanton remains on track

Wincanton said a mix of new contracts and cost-cutting helped stem the impact of recession

Haulage and logistics firm Wincanton has said a mix of new contracts and cost-cutting helped stem the impact of recession in the first half of the year.

The Wiltshire-based group, whose pre-tax profits fell 16% to £18 million in the six months to September 30, was helped by a clutch of wins including £275 million in new business from Marks and Spencer in September.

The firm, which employs 20,000 people in the UK, has also closed parts of its UK home delivery business and loss-making depots in Germany.

UK profits were 6% down on a year earlier in the first half, although its more volume-sensitive mainland Europe business saw earnings slump by almost two-thirds.

Wincanton, which manages some 8,000 trucks, said the cost savings and new business would feed through to a stronger second-half performance in "challenging" markets.

Chief executive Graeme McFaull said: "We are not planning for a broad economic recovery in the next 12 months or so."

Meanwhile the second half uplift will be broadly offset by "significantly higher" fees and margins payable on a new three-year £270 million facility agreed with lenders. The group cut its debt pile by £10.1 million to £166.3 million during the period.

JP Morgan analyst Damian Brewer said the self-help performed by the group would eventually feed through to the bottom line.

"In our view, Wincanton's tackling of underperforming operations, as evidenced by the German changes already announced, could see a steady lift in profit performance," he said.

Wincanton was founded in 1925 and originally worked in maintaining dairy plant and equipment for the milk industry.