Shares in Chippenham-headquartered logistics group Wincanton shot up by nearly 13% today after it said continued strong demand for its services was expected to lead to better-than-expected profits.
In a trading update the group said its third-quarter revenue had grown by 15% compared to the same period last year as it overcame a shortage of drivers.
The group, which has a 20,000-strong workforce – including 5,500 drivers – and operates from more than 200 sites across the country, has also benefited from the huge rise in online shopping and home deliveries over the past two years sparked by the pandemic.
As a result, it said it expects full-year profits to exceed current market expectations.
Revenue in its digital and eFulfilment sector increased by 51% in the quarter, driven by its £23.9m acquisition last September of eCommerce fulfilment specialist Cygnia.
Excluding Cygnia, which works with high-profile consumer-facing brands such as BrewDog, Moonpig, Molton Brown, Revolution Beauty and Whittard of Chelsea, revenue in digital and eFulfilment rose by 22%.
The integration of the Cygnia business was progressing well, it said, although online volumes for some customers were impacted by a higher-than-expected proportion of high street sales around Black Friday.
Wincanton, the UK’s largest third-party logistics group, said the customer fulfilment centre it operates for Waitrose.com had a successful first Christmas peak trading period while its two-person home delivery business contributed another quarter of strong performance, although volumes were down slightly compared to a particularly busy quarter in the previous year.
Its grocery and consumer sector business delivered 25m cases of food and drink in the week before Christmas, helping lift revenue in this sector by 19% in the quarter compared to the prior year.
Revenue in the group’s public and industrial sector revenue rose by 5%, primarily driven by the growth of public sector business – during the quarter operations started at Wincanton’s sixth inland border clearance facility in Holyhead, Wales, the latest milestone in a contract with HMRC.
It also said the challenges of driver and labour shortages were managed successfully to ensure the upturn in peak activity was appropriately resourced. Wincanton said it continued to work collaboratively with its customers to optimise service levels, mitigate supply chain risk and manage cost pressures.
It secured a number of significant contract wins and extensions in the period, including its own Brexit bonus with a new contract with the Department for Environment, Food and Rural Affairs (DEFRA), initially for a two-year period, to operate an inland border control post in Kent.
Wincanton will be operating the site and creating 300 jobs to manage biosecurity checks on goods coming into the UK from the EU.
The group is also extending its partnership with DFS to manage deliveries that go directly from suppliers to customer while new services for The Range, MGA Entertainment, Lakeland and Department of Health and Social Care (DHSC) were implemented in the period.
It is also on track to deliver its previously announced five-year contract with Primark for the provision of transport services to all its UK stores, starting next month.
Wincanton chief executive officer James Wroath, pictured, said: “Wincanton has continued to deliver value for its customers and this has generated another strong financial performance over the past quarter.
“Looking ahead, the business is on the right track. We are maintaining our relentless focus on the delivery of our strategy, with innovation and new technologies driving growth throughout the business.”
At lunchtime today Wincanton’s shares were at 393p, up 12.6% on the day.
