Pullman drags down profits at Wincanton

Profits were down at supply chain management group Wincanton on Thursday, despite sizeable growth in revenue for its contract logistics division.

The group’s half-year results show revenue grew by 5.8% to £582.2m, up from £550.9m in the corresponding period last year.

Underlying operating profit was down 5.6%, however, to £23.5m.

Wincanton said a number of new business wins were behind the revenue growth – including a three-year logistics agreement with Halfords and new contracts to manage B&Q’s distribution centres and more of the retailer’s home delivery service.

It also pointed to the renewal of long-standing agreements with HJ Heinz and Dairy Crest.

But chief executive Adrian Colman said this strong performance was more than offset by losses in other parts of the group.

“Our contract logistics sector has been a strong performer in the first half which has helped to mitigate the performance pressures in specialist businesses, most notably in the Pullman business.”

The group blamed Pullman’s poor performance on a number of “onerous” home shopping contracts coming to an end.

Wincanton said lower amortisation, finance and tax charges have offset lower operating profit performance, leading to a 6% increase in basic earnings per share to 8.8p – though underlying earnings per share dropped 2.8% to 10.3p.

The group’s debt is down as well – average net debt is down £17m to £124m, and closing net debt is down £4.7m to £62.2m.

“The recently announced disposal of Wincanton Records Management realises substantial value for the group, strengthens our balance sheet, provides greater capacity for future investment and focuses the Group on its core skills and capabilities in logistics operations”, Colman added.

As of 11:19 shares in Wincanton were 2.44% lower at 200p.