Wincanton has reported a 15 per cent drop in underlying operating profit to £236m in the first half. Sales were about ten per cent lower at £1,079.9m. Consolidated underlying operating profit margin, at 2.4 per cent, was slightly below the 2.5 per cent in the first half last year.
Nevertheless, chief executive Graeme McFaull remains confident: “We remain on track to deliver a full year performance in line with expectations. Our UK operations remain strong and we have taken decisive action to address underperformance in Mainland Europe. We are confident that our businesses have significant growth and recovery potential as the European economy emerges from recession.”
Operations in the UK and Ireland reported underlying operating profit of £24.4m, 6.2 per cent lower than the £26m last year. Sales, at £663.4m, were 10.4 per cent lower than last year.
Some £35m of the reduction in sales was down to the transfer of the chilled consolidation business to a joint venture. Other factors included lower levels of construction and shared user activity, and the loss of the Woolworth business.
However, the company said it had been growing business with existing customers. “The development pipeline currently includes a number of large potential projects in which we are working with customers to fundamentally re-assess and restructure their existing supply chain models, driven both by cost reduction and environmental imperatives. A new project for Britvic, for example, will see 50 vehicle loads per day transfer to rail between Daventry and Scotland, reducing CO2 emissions by some 3,330 tonnes per year for this one customer.
Other wins include the £275m contract with Marks & Spencer announced in September, along with contracts with Argos, Micheldever, Dunnes, Matalan and Superquinn and incremental business with AgustaWestland and BAE Systems.
Operations in Mainland Europe showed an underlying profit of £1.6m, £3m lower than last year, while sales were some ten per cent lower at £416.5m (18 per cent at constant exchange rates).
The majority of the revenue decline was the result of significantly lower volumes across intermodal and road transport activities in Germany.
The company recently set out a substantial restructuring of its German transport operations.
“The poor performance of our in-house groupage network, within our overall transport operations, has had a material adverse effect upon the profitability of both our German businesses and our Mainland European activities as a whole. Decisive action has now been taken to address this poor performance.
“Following the restructuring, our German business will be clearly focused on higher value-added activities and a portfolio of businesses which few, if any, of our competitors can match in terms of range, depth and flexibility,” it said.