Companies: WIN   

It was another good year of profits growth from logistics and distribution business Wincanton. Since demerging from parent Uniq in 2001, it has doubled its market value and continues to seek acquisitions in fragmented European markets.

For the year to March, Wincanton, boasting blue-chip clients such as Tesco, Sainsburys, Argos and B&Q, delivered a 10.2% rise in adjusted pre-tax profits to £35.6m on sales lifted 6.8% to £1,933m, with acquisitions and new business supplementing good growth within existing clients.

Highlights flagged up by chief executive Graeme McFaull include wins and renewals with Somerfield, Asda, Comet and Britvic, as well as work for the MoD and a significant contract renewal with Punch Taverns. McFaull insisted Wincanton can build on its excellent market positions in the UK and Ireland, where more than 90% of operating profits originate, and he is also pushing through profits recovery and margin gains in mainland Europe, where Wincanton focuses on Germany, France and Poland, and where loss-making operations have been pruned.

Further acquisitions, underpinned by strong profits and cash flows, are also likely. For March 2008, analysts expect growth in pre-tax profits to £39.2m, giving earnings of 23.2p and a 14.5p payout, and placing the shares on a modest forward rating of 16.6 with a 3.8% prospective yield. Given the group’s terrific domestic market position, strong cash flows, profits recovery potential in Europe, and overall track record, that rating is undemanding. Buy.

Wincanton	LSE	£194.82m	160.50p	-1.50p
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