Shares drop 30% after supply chain giant loses key Government contract
Wincanton’s shares dropped more than 30% this morning, wiping £100m off the group’s value, after it was forced to issue a profits warning.
The supply chain giant had revealed it lost a key Government contract while its wider challenges show no signs of abating.
It now expects pre-tax profits in 2024 to be “materially lower” than current market forecasts of £63m. However it said it remains on track to deliver 5% profit growth in this financial year, which ends this month.
Shareholders reacted badly, with shares dropping 95p to 210p in early trading – its lowest point since 2020.
Chippenham-based Wincanton has lost a contract with HMRC to provide logistics services to support UK customs arrangements at inland border facilities, and its work will finish in June.
The group said it is “extremely disappointed” to have not been selected in the retendering process. It highlighted its “acknowledged strong performance over the past two years” and the continuation of major Government contracts with HMRC, Defra, the Department for Health and Social Care and the Cabinet Office.
But Wincanton acknowledged that the lost contract and “a more challenging external environment in the coming financial year”, including an accelerated reduction in consumer spending and customer volumes, will impact its financial performance in the new financial year.
It has sought to reassure shareholders about its prospects over the medium-term, as it relies on technology for both warehouse automation and Transport Control Towers to “significantly increase” value and it looks towards significant growth opportunities across eFulfilment and Public and Industrial sectors.
