Wincanton’s stock plummets after the company loses a major order
Shares in British logistics group Wincanton plummeted by a quarter on Tuesday after the company announced it had lost a £71million government contract that included managing post-Brexit tariff arrangements.
The London-listed supply chain services firm said it would no longer manage the UK border points at Holyhead and Sevington, dropping its share price 26 per cent to 226 pence by midday Tuesday.
The more than £100million drop in Wincanton’s market value from Tuesday’s move leaves the company’s shares about 50 per cent below their 2021 peak.
The loss of the contract with HM Revenue & Customs, which Wincanton said affected the handling of road haulage, will hurt profits, which the group said would be “significantly lower” than expected.
The company, which provides warehousing and delivery services for retailers, added that a fall in consumer spending would also hurt profits, which are expected to fall below market expectations by March 2024.
The group, like its peers, had benefited from booming demand for online shopping deliveries during the Covid-19 pandemic, boosting its shares by about 80 percent in the year to May 2021.
Since the fall in consumer spending due to the cost-of-living crisis, the group has increasingly relied on its public sector business, making losing the HMRC contract a major blow.
The loss of the HMRC contract was disappointing after the group put in a “strong performance” in “exceptionally shortened periods of time”.
However, the company said it still has “big deals” with HMRC and the UK Government’s environment and health agencies.
The group said it was involved in managing issues related to the UK’s exit from the EU Customs Union in 2020, which posed a number of logistical complications for goods arriving in the country.
Since taking over the lost HMRC contract, Wincanton has said he has contributed to “how business is done in the UK post-Brexit”.
The company said the contract would be switched to a new deal in June, but did not comment on why the government switched suppliers.
Ahead of today’s announcement, Wincanton calculated that the market was expecting a pre-tax profit of £63m by March 2024, some 9 per cent higher than current year forecasts.
HMRC did not immediately respond to a request for comment.
https://www.ft.com/content/07c51f6e-5ce5-4e41-be24-b240c2016849 Wincanton’s stock plummets after the company loses a major order