Logistics giant Wincanton today said its profits would be well ahead of the market’s forecasts this year as booming demand for home shopping boosted its delivery vans arm and a cost savings plan bore fruit.
The UK’s biggest logistics company said its business servicing online orders had been especially strong in July and August and was seeing revenues “significantly ahead” of pre-Covid levels.
It is the second time it has upgraded City forecasts since July.
Wincanton recently won contracts with Waitrose for home delivery in London and a major contract with Morrison’s for distribution and vehicle maintenance of its delivery lorries. The group also runs warehouses for big clients including Screwfix.
However, falls in demand from industries such as construction and fuel distribution forced it to reduce its vehicle fleet and cut overheads.
Revenues in April tumbled 15% and the group launched a major cost-cutting drive across its operations. It suspended its dividend, furloughed staff and increased its overdraft with banks to get it through the crisis.
Today, in a brief statement expected to trigger a jump in the share price, it said: “Given the combination of Wincanton’s improved trading performance, cost intervention measures and the recovering economy, the board expects results for the current year to be materially ahead of market expectations.
“This continues to assume no further Covid-19 impact that severely affects the business.”
Wincanton shares have had a sluggish time of it this year despite the increase in e-commerce business through the Covid lockdowns.
From the low point in March of 155p, they closed last night at 180p, still well down on the 297p at which they started the year.
At the start of the pandemic crisis in the UK, it fared well from the surging demand from its supermarket clients to cope with shoppers’ panic buying but its two person home delivery network temporarily had to shut down due to social distancing rules, hitting profits hard.
Its business delivering to the construction industry and transporting shipping containers were also badly affected.
Last year it launched an abortive bid to buy rival Eddie Stobart after taking fright at the target’s balance sheet and other finances.