FTSE-listed 3PL Wincanton has sunk £25.9m into the red and offloaded its Dutch and German businesses for €46.5m (£41m) as chief executive Eric Born makes changes to the business as part of a five-year turnaround plan.
Its share price, already half what it was a year ago, fell a further 10% to 99p on Thursday 9 June, before rallying later in the day as Born suspended dividend payments to investors for at least a year and justified his turnaround plan.
Having made a pre-tax profit of £3m in the previous financial year, Wincanton revealed a pre-tax loss of £25.9m in the 12 months to 31 March. It blames the loss on difficulties in its western European businesses as well as stopping and redeveloping an IT project.
UK and Ireland sales were static (increasing just 0.14% to £1.32bn), while underlying operating profit dropped by £1.6m to £46.8m. Overall group turnover was also static at £2.18bn.
After six months at the helm of Wincanton, Born has confirmed the sale of the firm's German road and central and eastern Europe activities to German operator Raben for €36m (£32m) and the disposal of its Netherlands arm to Dutch firm JCL for €10.5m (£9.3m).
"These sales mark an important step in our strategy to focus more closely on areas where we have significant scale and strong growth potential," Born says.
He will focus on lowering the firm's cost base, and either turning around or exiting underperforming sectors, such as foodservice. He will also target profit growth in sectors where it is strongest, including construction and retail.
Born says the group must reduce its debt so the company can start to reinvest more in future growth areas. Borrowings stood at £229m at the year end, while group net debt totalled £151.8m.
An analyst for investment bank Investec says that while the suspension of shareholder payments will be seen as disappointing by investors, he believes a cut had been expected.
"Net debt levels are still high and while the underlying operational performance is not too poor, the stock is likely to be weak."
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