Wincanton raises dividend as it mulls Eddie Stobart bid
Wincanton posted a rise in underlying profit in its latest half-year results and raised its dividend, as it continued to hold off on a bid for struggling rival Eddie Stobart.
Read more: Eddie Stobart confirms £55m rescue bid – but will shareholders be left in the cold?
The figures
Profit before tax fell 5.3 per cent year on year to £28.5m for the six months to the end of September.
Revenue rose 1.9 per cent to £592.9m, however, while underlying profit before tax climbed nine per cent to £26.3m.
Net debt fell almost 40 per cent to £14.8m compared to the same period a year ago.
But basic earnings per share dipped 7.5 per cent to 19.7p, though Wincanton hiked its interim dividend 8.3 per cent to 3.9p per share.
Why it’s interesting
The logistics giant cited contract wins with supermarkets Morrisons and Co-op, as well as Weetabix, as its retail and consumer division helped boost revenue growth in the first half of the year.
But a 4.2 per cent drop in its industrial and transport sector, as Wincanton left underperforming contracts, offset the boost from retail.
The firm also said it was “monitoring market conditions and corresponding activity levels closely” amid a slowdown in areas like the UK’s struggling construction industry.
Almost £2m in net financing costs knocked underlying profit before tax, but it still rose nine per cent to £26.3m.
Read more: Eddie Stobart shareholders face steep losses in potential rescue
The firm said it is continuing to eye a merger with Eddie Stobart, but a rival £55m bid has arrived since Wincanton revealed its interest last month.
Its logistics competitor suspended shares in August and Wincanton said an offer remains contingent on Eddie Stobart’s auditor finalising a review of accounts.
“Our remaining due diligence is focused on achieving assurance as to the underlying profitability, balance sheet and cash flow; cost saving opportunities; and the funding of working capital requirements on a short- and medium-term basis,” Wincanton said.
What Wincanton said
Wincanton CEO James Wroath said:
Since joining the Company in September, I have visited many of our customers and the sites we operate for them. Our focus on operational excellence, high quality people, continued innovation and meeting our customers’ needs is embedded across the business and drives our healthy performance, as shown in the results announced today.
Signing significant new business wins and renewing key contracts in the first half is evidence that our customers continue to find our service and propositions compelling.
We continue to drive efficiency across the business which supports our underlying operating profit, which has increased by 5.6 per cent compared to last year, and has enabled us to reduce our net debt once again. We will continue the disciplined focus on winning more profitable business, maintaining our emphasis on performance improvement and cost management, and I look forward to establishing more opportunities for further growth in the future.
I have started to review the opportunities facing the group as part of our wider strategy and look forward to updating the market in due course as we continue to take the business forward.
Main image credit: Wincanton