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Wincanton brings back the dividend and slashes debt

Five years after it was axed, Wincanton has enough confidence in its balance sheet to return to shareholder payouts.
June 10, 2016

Wincanton 's (WIN) recent fortunes can probably be best described as a positive domino effect. In November, the logistics group fetched a good price for its records management business WRM, which allowed it to slash its debt, benefit from lower interest payments, and book an underlying operating profit 5.4 per cent up in the year to March 2016.

IC TIP: Buy at 195p

The £60m generated from the WRM sale means the balance sheet now looks a lot healthier. Not only is the pension liability 27 per cent lower, but the fall in borrowings has allowed Wincanton to reintroduce a final dividend, five years after it was axed. That news sent the shares up by 10 per cent on these full-year results, which were further underpinned by a solid 12 months of trading.

The chief drivers of this uptick were a growth in volumes in retail merchandise, and a flurry of new business wins, including a five-year contract to manage B&Q's distribution centres and a three-year agreement for transport logistics with Halfords.

The improved outlook has led broker Numis to upgrade its adjusted pre-tax profit and EPS forecasts to £36.6m and 23.1p for the March 2017 year-end, against £35.3m and 22.3p in 2016.

 

WINCANTON (WIN)

ORD PRICE:195pMARKET VALUE:£238m
TOUCH:190-195p12-MONTH HIGH:213pLOW: 140p
DIVIDEND YIELD:2.8%PE RATIO:4
NET ASSET VALUE:*NET DEBT:£39.5m

Year to 31 MarTurnover (£bn)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20121.20-47.4-35.3nil
20131.0914.08.7nil
20141.1034.923.6nil
20151.1124.916.6nil
20161.1565.850.75.50
% change+4+164+205-

Ex-div: 7 Jul

Payment: 5 Aug

*Negative shareholders' funds