The virtuous cycle that impressed investors at Wincanton 's (WIN) preliminary results for 2016 was again in evidence at the current year's halfway mark. A further reduction in borrowings meant net debt almost halved in the 12 months to September, which narrowed interest payments by another £2.9m and - together with a slimmer tax increase - helped to swell net income by 56 per cent to £16.2m.
From an operational standpoint, the logistics group is also ticking the right boxes. Underlying operating profit at the industrial and transport division reached £14.3m, compared with £10.3m a year ago, thanks to improving performance from Pullman, Wincanton's commercial vehicle repair and maintenance business. That was partly due to the cessation of several onerous contracts, which accounted for a 9.2 per cent fall in divisional revenue and the slight decline in the group's overall top line.
Earnings at the larger, lower-margin retail and consumer segment were flatter, although a recent five-year contract win to operate Majestic Wines' national e-commerce offering bodes well for future mandates and second-half profit. Accordingly, house broker Numis expects pre-tax profit of £39.9m and EPS of 25.7p this year, rising to £41.9m and 27.1p in the 12 months to March 2018.
WINCANTON (WIN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 200p | MARKET VALUE: | £247m | |
| TOUCH: | 200-204p | 12-MONTH HIGH: | 215p | LOW: 140p |
| DIVIDEND YIELD: | 4.3% | PE RATIO: | 4 | |
| NET ASSET VALUE: | * | NET DEBT: | £32.2m | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 583 | 12.9 | 8.8 | nil |
| 2016 | 562 | 19.6 | 13.2 | 3.0 |
| % change | -4 | +52 | +50 | - |
Ex-div: 8 Dec Payment: 11 Jan *Negative shareholders' funds, including intangible assets of £89m, or 72p a share | ||||
