Logistics company Wincanton (WIN) kept its recovery on the road during the first half, yet despite winning some big contracts there has been no tangible improvement at its core retail and consumer goods business. Margins on contract renewals are being squeezed, too. Nevertheless, the group should hit full-year targets, debt is shrinking and any incremental growth in the UK economy will feed through quickly.
Cutting costs and working smarter generated a small increase in group operating margin to 4.5 per cent, edging underlying operating profit up 2 per cent to £24.2m. Revenue at the core logistics operation fell year on year, but was at least better than the previous six months. Contracts with Morrisons and Sainsbury's and a sharp pick up in construction work, largely housebuilding, during the second quarter kept profit flat at £19.7m. Most of the margin improvement, however, came at the much smaller specialist business. Moving containers around made less than last year, but stripping out costs, shutting a loss-making site and rising demand for document shredding grew profit there by 10 per cent to £4.5m. And while capital spend planned for the second half will mean only a modest decline in year-end net debt, average debt over the six month period fell sharply to £175m and is, says finance boss Adrian Colman, sustainable.
Numis Securities expects full-year adjusted pre-tax profit of £23.5m and adjusted EPS of 14.4p, up from £21.3m and 12.8p, respectively, in the year to March 2013.
WINCANTON (WIN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 128p | MARKET VALUE: | £156m | |
| TOUCH: | 128-129p | 12-MONTH HIGH: | 139p | Low: 44p |
| DIVIDEND YIELD: | nil | PE RATIO: | 12 | |
| NET ASSET VALUE: | * | NET DEBT: | £87.2m | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 551 | 7.6 | 4.4 | nil |
| 2013 | 542 | 9.7 | 6.4 | nil |
| % change | -2 | +28 | +45 | - |
*Negative shareholders' funds of £275m | ||||
