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UPDATE 2-Wincanton's profit buoyed by renewals, new contract wins
June 5, 2014 / 6:36 AM / 4 years ago

UPDATE 2-Wincanton's profit buoyed by renewals, new contract wins

* Full-year underlying pretax profit rises 20 pct to 25.6 mln stg

* Revenue up marginally at 1.10 bln stg

* Reduces net debt by about 40 pct to 64.9 mln stg

* Says not to pay dividend as it tries to further cut debt

* Shares rise as much as 11 (Adds comments from finance director, analyst comment, background; updates share movement)

By Esha Vaish

June 5 (Reuters) - British logistics company Wincanton Plc posted a 20 percent jump in full-year profit as it won new contracts and saw a significant number of renewals across its divisions.

Shares in the Wincanton, which counts Marks and Spencer , WM Morrison Supermarkets and Asda among its clients, surged as much as 11 percent. The stock was one of the top percentage gainers on the London Stock Exchange on Thursday.

Wincanton said net debt, an issue flagged by it on multiple occasions, fell by about 40 percent to 64.9 million pounds.

Underlying pretax profit rose to 25.6 million pounds ($42.9 million) in the year ended March 31, from 21.3 million pounds a year earlier. Revenue grew for the first time since 2009, inching up 1.1 percent to 1.10 billion pounds.

Wincanton’s revenue has suffered over the years as large retailers have lost out to discount chains and online stores, in turn trimming their use of haulage and freight services.

“The debt reduction is a key factor in the equity story,” said Numis Securities analyst Steve Woolf, terming Wincanton’s earnings “a very strong set of results”.

Wincanton, which gets about 60 percent of its revenue from retailers and 10 percent from its exposure to the construction sector in the UK, said its results were helped by a pickup in the construction sector, while demand from retail clients remained largely muted.

Group Finance Director Adrian Colman told Reuters he expected Wincanton to “make progress” on profit and revenue this year relying on signs that Britain’s growth would be more sure-footed.

“Related sectors around construction (such as) household products and do-it-yourself retailers are slightly better than they were before, which is encouraging in the coming year.”

The UK clocked GDP growth of 3.1 percent year-on-year in the first quarter, marking the quickest pace of growth since the fourth quarter of 2007, data from the Office for National Statistics released last month showed.

Colman said he expected Wincanton to win new business from convenience stores while demand from the larger retailers would largely be stagnant in the short-term.

The company also said it would not pay a dividend as it continued to work towards reining in debt.

Colman added that Wincanton would see a more modest reduction in debt this financial year and did not expect to start paying dividends next year.

Wincanton shares were up 9 percent at 129.83 pence at 0947 GMT. ($1 = 0.5969 British Pounds) (Reporting By Esha Vaish in Bangalore; Editing by Gopakumar Warrier)

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