Distribution group Wincanton today revealed pre-tax losses mounted up to £25.9 million in the last financial year, although it benefits from some £600 million in revenue from its retail customer base.
In a preliminary results statement for the year to March 31st 2011, Wincanton said that the last 12 months had seen some “significant wins and renewals” in terms of retail contracts for the firm, including WHSmith, Sainsbury’s and Superquinn, but admitted other areas of the business need restructuring.
The group annual losses are compared to profits of £3 million one year before, while total revenues were slightly down to £2.18 billion.
Retail revenue grew year-on-year mainly due to increased volumes across most of its customer base, although the company acknowledges it will have to be flexible in the months to come in order to adapt to an ever-changing industry.
Commenting on its retail business, Chairman David Edmonds said: “The sector remains challenging as many retailers seek to reorganise their networks, consolidate their operating bases and place a high degree of focus on cost reductions as standard warehousing becomes commoditised.
“As market leader we need to adapt with our customers and capitalise on the opportunities presented by a changing market. The accelerated development of multichannel retail strategies has generated new business opportunities.”
Wincanton added that the volume impact seen in its retail customer base benefited its containers business, with volumes increasing by 29 per cent year-on-year to reflect the resurgence of import/export activity.
The difficult year outside of retail saw Wincanton replace CEO Graeme McFaull with Eric Born in December 2010 and the new boss had been tasked with undertaking a strategic review of the business to improve performance.
A slowdown, particularly in its British and French businesses, has prompted the supply chain solutions firm to today announce that it is offloading its German road businesses and its Dutch logistics operations for a total of €46.5 million (£41.3 million) to help reduce debt. It has also suspended dividends payments for at least a year.
Born said: “Following a strategic review, we have developed a plan to return the business to sustainable profit growth, based on leveraging our core strengths, reducing our cost base and creating flexibility in the balance sheet.
“Our objective is to turn around or exit underperforming parts of our business so that we can focus on areas with strong growth potential and capitalise on the significant opportunities presented by a changing market.
“We have targeted a reduction in our debt levels through better operating profit performance, disposals and a temporary suspension of the dividend to assist the overall preservation of cash.”