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Retail wins aid Wincanton’s turnaround strategy

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A plethora of new retail contracts boosted business for Wincanton in the first half of its financial year, as the supply chain solutions specialist’s transformation from a pan-European firm to a leaner UK & Ireland-focused operation continued apace.

Deals struck with Tesco, Asda and Sainsbury’s, the three largest retailers in the UK, were cited as success stories for the group in the six months to September 30th 2011, during a time when profits and sales fell.

Including both continuing and discontinued operations, Wincanton reported a significant loss before tax of £75.5 million, compared to profits of £11.7 million at the same time last year.

Wincanton has spent the last few months disposing of its mainland European business, with its Dutch, German and Central & Eastern European operations now wound down, while the proposed sale of its remaining Mainland European operations to Rhenus AG & Co is currently underway.

However, underlying operating profits in the business’s UK & Ireland continuing business for the 26-week period were only down £2.8 million year-on-year to £22.3 million, while sales slipped £55.4 million to £625.4 million, resulting in a stable operating margin of 3.6 per cent.

Contracts affecting these figures include a seasonal warehousing deal for Tesco and a fleet defect management arrangement with Asda, while the half-year period also saw Wincanton become sole provider of port to distribution centre container services for Sainsbury’s.

Outside of grocery, the supply chain company set up a significant retail distribution operation on behalf of fashion specialist and owner of the Superdry brand, Supergroup.

Reflecting on the future direction of the business and changing supply chain requirements, today’s trading statement said: “Retailers and manufacturers are increasingly seeking to engage Wincanton on areas where value is added over and above what can be done in-house, reflecting the breadth and depth of our expertise.

“Specific examples of this are collaborative transport solutions, e-fulfilment services to support multichannel retailing and shared-user warehousing backed by leading edge systems.

“New opportunities in the form of first time outsourcing, where we can leverage our scale, infrastructure and expertise are arising due to pressures in the market.”

Eric Born, Wincanton CEO, added: “We are now well positioned to focus on the operational aspects of our strategy and to build on our reputation for service excellence in our core UK & Ireland market.

“Through the delivery of operational efficiencies and contract wins we expect to continue to build on the strong, underlying profitability of our UK & Ireland business.”

Published on Thursday 10 November by Editorial Assistant

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