The increase in home deliveries triggered by the spike in online shopping during lockdown will boost profits at logistics group Wincanton, its directors have said.
The Chippenham-headquartered group, which has a fleet of 3,500 vehicles and operates 14m sq ft of warehouse space, is a major player in both the supermarket fulfilment and home delivery markets.
It told shareholders at this week’s AGM that it had reacted quickly to the Covid-19 crisis to control costs while also benefiting from home shopping.
As a result, it expects its full-year operating profit before tax to be “significantly ahead of current market forecasts” and not less than £30m – assuming no further Covid-19 impact on the business.
The group, Britain’s largest third-party logistics business, said it had continued to see a steady recovery in trading since it reported its preliminary results just over a month ago.
There had been improved levels of demand across most of the business, particularly in home delivery operations and eFulfilment, it said, although it added that volumes in some areas, including construction and fuel distribution, remained below those achieved at this stage last year.
The firm said it would also benefit from two significant new contracts with supermarket groups that will both start in its current financial year – a deal with Waitrose to create a customer fulfilment centre in London for its online grocery deliveries that it described as ‘transformational’, and a contract with Morrisons to manage additional distribution, vehicle maintenance operations and national transport planning services.
The group said: “Our customers recognise the strong performance we deliver for them, evidenced by the award of a contract to operate a fifth Screwfix distribution centre and a two-year extension of all our transport and warehousing services with Asda.”
It said it had acted swiftly when the coronavirus pandemic first hit the UK economy to implement structural cost changes in response to the reduction in demand. This included down-sizing its vehicle fleet and reducing overhead costs across the group.
Cash collection and liquidity management remained strong, it said, and current net debt remained significantly below the prior year position, primarily due to the deferral of payments.
CEO James Wroath told the AGM: “Despite the challenges Covid-19 has presented us, the group has been successful in winning new business and renewing existing contracts, positioning us well for future growth.”
Wincanton employs 19,100 workers, including 5,500 drivers, providing supply chain services to brands ranging from Ikea to Britvic and Screwfix and across a wide range of industries including retail, construction, defence and energy.
