UPDATE: Wincanton Profit Falls But New Sectors To Aid Growth

10th Jun 2010 11:35

(Adds executive comment.) By Rachael Gormley and Jason Douglas Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Haulier Wincanton PLC (WIN.LN) Thursday reported an 85% drop in fiscal year profit, hurt by a dip in revenue and a restructuring of its loss-making German operations, but said it is poised for growth due to a pickup in the volume of goods companies are transporting, and contributions from newer sectors like defense. Wincanton said it expects to report a net exceptional profit in fiscal 2011 due to two asset disposals it is considering. It wasn't specific. Group Chief Executive Graeme McFaull told Dow Jones Newswires the company is also exploring opportunities to win new business from public sector outsourcing, which is expected to increase as the U.K. government seeks ways to cut public spending. There are quite a lot of opportunities in the medium term, McFaull said. Wincanton Thursday reported a pretax profit of GBP3 million for the year to March 31, compared with profit of GBP20 million a year earlier. Revenue declined 7.6% to GBP2.18 billion, as slower economic activity meant Wincanton's customers moved fewer goods. Wincanton's customers range from retailers like Tesco PLC (TSCO.LN) to drug makers like GlaxoSmithKline PLC (GSK.LN) to defense firms like BAE Systems PLC (BA.LN). Companies in those sectors proved resilient and Wincanton won big new contracts from existing clients, but revenue from others, like construction, fell sharply, said McFaull. Earnings were weighed on by a GBP14.9 million restructuring of its German operations and costs associated with lay offs and the closure of a home delivery network in the U.K. Excluding these and other items, pretax profit declined 16% to GBP34.7 million from GBP41.3 million a year earlier. Wincanton said it cut its net debt to GBP151.9 million at the fiscal year-end from GBP176.4 million and held its dividend steady at 14.91 pence a share. McFaull said one of Wincanton's key areas of focus in the years ahead is driving up earnings from seven newer sectors. These include defense, where customers include BAE and General Dynamics Corp. (GD); containers, where customers include Home Retail Group PLC (HOME.LN) unit Argos; and records management, where contracts have been won with insurer Aviva PLC (AV.LN) and the City of London police. Together, the seven sectors Wincanton identified contributed GBP10.3 million to fiscal 2010 profit, before overheads. McFaull said Wincanton is aiming to get each of the seven sectors to contribute GBP10 million in profit within five years. At 1023 GMT, shares in Wincanton were up 2 pence or 0.9% at 227 pence, outperforming a 0.3% lower Dow Jones U.K. Smaller Companies index. -By Rachael Gormley and Jason Douglas, Dow Jones Newswires; 44-20-7842-9272; [email protected] (MORE TO FOLLOW) Dow Jones Newswires June 10, 2010 06:35 ET (10:35 GMT)