Interim Management Statement

RNS Number : 8732F

Wincanton PLC

21 January 2010

 



For Immediate Release

21 January 2010

Wincanton plc

("Wincanton")

Interim Management Statement

The following statement comprises Wincanton's Interim Management Statement for the period from 1 October 2009 to 21 January 2010:

"Although our markets remain challenging, we continue to expect to report full year pre-tax profit in line with management expectations.

Performance at the operating profit level has held up well.  As previously indicated, our reported pre-tax profit for the year to 31 March 2010 is expected to be below the results reported last year, including the effect of a significant increase in net financing costs in the second half following the renewal of our banking facilities.

The substantial core of open book contracts underpinning our operations in the UK & Ireland and the benefits of last year's cost reduction exercises, together with continuing new business wins, have continued to offset the adverse effects of lower volumes in certain of our activities. We are particularly pleased with the contract wins being recorded in our newer sectors & services, confirming our strategic assessment of their above-average margin and growth potential for the Group.

The continuing strength of our traditional core in the UK & Ireland, the attractive growth prospects of our newer sectors & services, and the recovery and development opportunities in our Mainland European businesses, give the Group three areas of strategic focus with attractive profit potential for the future.

UK & Ireland

In the UK & Ireland we have remained very active in respect of both contract wins and renewals. Long-standing relationships with customers such as Chevron, Air Products, GSK and Superquinn have been successfully extended, new business has been added with existing customers such as B & Q and our leadership credentials in the retail sector have been further reinforced with a contract gain with a major retailer who will be a new customer for the Group.  

Cost savings and productivity improvements remain at the top of our customers' agendas and we continue to work proactively with them to identify and deliver significant financial and operational benefits. Consultancy assignments for groups such as SAB Miller and Morrisons, transport optimisation and inbound consolidation centre initiatives for major retailers, and implanting Wincanton expertise in major manufacturing groups through staff secondment, are all examples of ways in which we are supporting our customers through the recession and successfully reinforcing and extending our many long-standing relationships.

New Sectors & Services

In our newer sectors & services profit and growth momentum remains encouraging, although we are yet to see signs of sustained recovery in those activities which are significantly volume-driven.  

Our home delivery activity has successfully implemented a step change in the operational performance and service levels of M&S's home delivery business, one of our major contract gains in the first half. First half losses in the now closed shared user home delivery network have been eliminated. In recycling and waste management we have renewed our contracts with Comet, Home Retail Group and Shop Direct and have also benefitted from a recovery in recyclate prices. In records management our investment in new capacity is generating new business and allowing us to make further progress towards our objective of national coverage.  

Container volumes have yet to recover to pre-recession levels, and have recently been badly affected by port closures due to adverse weather conditions, but we are continuing, with a longer-term perspective, to add new business from Wincanton's existing manufacturing and retail customers. Construction volumes, likewise, remain subdued, but new business wins with customers such as Cemex and Speedy Hire, and a healthy pipeline of further development opportunities, confirm our ability to gain market share in the sector, increasing the potential upside for Wincanton as we head towards 2011 and our customers' expectations of market recovery.  

In Foodservice we have been notified of a major contract win with one of the UK's fastest growing foodservice companies, and are well-advanced in our investment plans to create substantial new capacity for the sector. Our defence activities continue to perform ahead of our expectations. A major contract renewal with AgustaWestland, significant growth in our activities with BAE Systems and a good new win with the Aircraft Carrier Alliance provide further encouragement that this is another sector which offers major development opportunities for Wincanton.  

Wincanton is this afternoon hosting an Investor Forum at the offices of Buchanan Communications, focusing on the potentially transformational impact of these newer sectors & services on the Group's future growth prospects.

Mainland Europe

In Mainland Europe, our principal focus in the second half remains the successful implementation of our restructuring plans for our German Road network. Good progress is being made, with the planned headcount reductions and site closures on track for completion by the end of the current financial year.  The projected benefits of the restructuring are still anticipated to be delivered in line with our expectations in our next financial year. Their significant cost will be recognised as an exceptional item in this year's results.

In Germany our increasing market presence has been confirmed by a major contract award from Porsche, already successfully implemented, managing their Pan-European inbound supply chain into manufacturing plants in Leipzig and Stuttgart. New business activity in France is also benefiting from our growing track record of successful project delivery for blue-chip customers. A good new win from Eprus, a government health agency, will generate volume for certain of our under-utilised sites. A major pharmaceutical company is also expected to become a customer at our new specialist pharmaceutical centre in Strasbourg. Contract renewals in France include Bostik, Bandai and HSS. Markets in Central & Eastern Europe remain highly competitive, but substantial renewals with existing customers such as BAT, Goodyear and Henkel, when added to new wins with customers such as Danone and Velux, combine to give us continuing momentum.  

Our increased focus on Pan-European forwarding and transport management is also delivering progress. A major contract renewal with GSK, and our growing business managing structural and engineering products into the oilfields of Kazakhstan for Europe's major steel groups, are clear indications that we have a good business model with growth potential."

  Graeme McFaull, Wincanton Chief Executive, commented:

"Wincanton generated strong profit and dividend growth for shareholders pre-recession and is delivering a resilient performance through the recession. We look to the future with confidence given the recovery and growth prospects of our increasingly diversified portfolio of services."

For further enquiries please contact:

Wincanton

Graeme McFaull, Chief Executive 

Gerard Connell, Group Finance Director                     [phone]

Buchanan Communications    

Charles Ryland / Jeremy Garcia / George Prassas    [phone]

 

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