Logistics business Wincanton plc has announced a reduction in first quarter sales although performance was in line with market expectations.
According to its Q1 trading update for the three months ended 30 June 2023, total sales were down 4.5% year-on-year, this excludes closed book transport contracts. Year-on-year revenue is 10.4% lower when including closed book transport.
Wincanton, which provides services for furniture retailers including Loaf, Dwell, DFS, IKEA and The White Company, said: “As set out in the Group’s full year results, the strategic reorganisation in Transport was instituted to create 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. The Group is already seeing early benefits from this strategic shift.
“The Group’s foundation sectors continue to provide scale and strong cash generation in a challenging market. Revenue in Grocery and Consumer decreased by 5.6% year-on-year and General Merchandise was 16.9% lower, reflecting both volume reductions and customer churn.
“Revenue from eFulfilment increased by 15.0% in the first quarter, demonstrating its importance as a growth driver. The Group secured several significant new eFulfilment contract wins in the quarter, all of which will commence in Q2. These contract wins include 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 the Public and Industrial sector increased by 2.1% year-on-year, with growth in our Defence customers and EDF Hinkley Point offsetting the reductions from the contracts with HMRC and DEFRA. The Group secured new contract wins in the key Defence and Industrial markets, expanding its partnerships with Rheinmetall BAE Systems Land and British Salt. The Public and Industrial sector includes construction closed book transport contracts. Where no protection exists, these transport contracts are being exited in alignment with our technology-based transport strategy.
“Wincanton is well-placed to continue to navigate the challenging external environment with its successful strategy and continued investment in automation technology, underpinned by its diversified customer base. The Group’s strategic shift in transport towards open book contractual agreements will deliver both financial and operational benefits.
“The Group maintains a resilient financial position with a strong balance sheet and consistent cash generation. Management continues to actively engage with the Wincanton Pension Fund Trustees to agree an optimal contribution schedule in response to the ongoing triennial valuation and expects to provide a further update at half year.”
