5th Nov 2014 11:18
LONDON (Alliance News) - Shares in Wincanton PLC were trading lower on Wednesday, despite the company posting a jump in pretax profit on the back of a slight increase in revenue, saying its on track to meet full year expectations and analysts all suggesting the numbers looked positive.
Shares in the supply chain services company were among the worst performers in the FTSE All Share index in morning trade, down 6.9% to 137.75 pence, despite it reporting a 31% rise in pretax profit in the half year to the end of September of 31% to GBP12.7 million, from GBP9.7 million a year earlier.
Underlying earnings per share for the company rose 26% to 10.6 pence per share, it said, driven by lower financing charges in the period.
The group did, however, warn that it has seen volume reductions in some key sub divisions, including retail and tankers & bulk, and is continuing to experience margin pressure amid a competitive market.
The company's net debt fell to GBP66.9 million from GBP87.2 million a year earlier. It also posted a fall in net financing costs in the half-year, down to GBP9 million from GBP11.3 million.
Revenue for the company rose 1.6% to GBP550.9 million from GBP542.2 million the year earlier. Its Contract Logistics business reported GBP464.1 million in revenue, up 0.5% on the GBP461.8 million posted last year, while its Specialist business saw revenue increase to GBP86.8 million, up 8% against the GBP80.4 million in the first half of 2013.
The rise in revenue in the Contract Logistics arm was driven by continued strong volume performance from the construction and FMCG sectors, but was offset slightly by some volume falls in tankers & bulk. Growth in grocery revenue was also held back by the impact of site closures amid retailers reshaping their portfolios, the company said.
Despite the rise in revenue in the Specialist business, operating profit was down to GBP4 million from GBP4.5 million for the same period in 2013, primarily owing to increased investment in its Pullman vehicle maintenance and repair business and margin pressure on contract renewals.
"These results represent another solid half of operational and financial performance," said Eric Born, chief executive of Wincanton, who added the company is on track to meet its full-year expectations.
Analysts were consistently positive on the results, with Numis upping its earnings per share estimate for the company and Investec reiterating its Buy rating and 160 pence price target.
Numis said the first-half performance was in line with its forecasts and said the benefits from the fall in financing charges had pushed it to increase its earnings per share estimate for the company by 5% to 17 pence per share.
The broker said the shares continue to offer value, in its view, given the solid macroeconomic backdrop and momentum from new contract wins.
Investec said the half-year results were once more "solid" from Wincanton with "no material surprises".
It said Wincanton management was doing well in grinding away at its overall debt levels, which was having a positive impact on its forecast interest charge. Due to that fall, Investec has upgraded its pretax profit forecast for Wincanton to GBP28 million from GBP27 million.
By Sam Unsted; [email protected]; @SamUAtAlliance
Copyright 2014 Alliance News Limited. All Rights Reserved.
Related Shares:
WIN.L