Wincanton made the loss of the contract public in its latest trading update, resulting in a share price drop of around 26% in just 48 hours. The company has also issued a profit warning and is said to have a stock market valuation over £100m lower as a result of the HMRC decision.
As explained by Wincanton, the contract concerns the provision of logistics services to support UK customs arrangements at post-Brexit inland border facilities.
According to The Daily Telegraph, the contract for those services has gone to France’s Sodexo, whose current market value is almost €13bn.
Headquartered in the Paris suburb of Issy-les-Moulineaux, Sodexo is a food services and facilities management company that made €695m in profits last year. The company is also known for offering special debit cards for businesses to provide staff with bonuses and special offers from retailers.
Speaking to the Daily Telegraph, analyst and stock broker Peter Hunt claimed HMRC’s decision was based on price as opposed to the quality of work.
The HMRC contract with Sodexo will see UK taxpayers’ cash used to boost the profits of an EU-based company, providing yet another Brexit benefit for a major European business. The news follows widespread reports of British businesses setting up entities in the EU to conduct post-Brexit logistics operations more efficiently and cost-effectively.
Reacting to the news in a trading update, Wincanton said it was “extremely disappointed to lose this business after a well-executed implementation delivered in exceptionally shortened timescales and acknowledged strong performance over the past two years.”
The company also stated that it “remains a strategic government commercial partner with major contracts with HMRC, Defra, the Department for Health and Social Care and the Cabinet Office.”
Wincanton nonetheless admitted that as a result of the HRMC contract going elsewhere, it expects a more challenging 2023:
“Alongside the loss of this contract, and as previously announced, Wincanton continues to expect a more challenging external environment in the coming financial year, including an accelerated reduction in consumer spending and customer volumes. The combination of these factors will impact financial performance in FY24. The Group now forecasts a reduced profit before tax for FY24 materially lower than current market consensus [based on current Company compiled market consensus PBT for FY24 of £63m].”
Keen to finish its trading update on a positive note, Wincanton stressed it is confident in its strategy and that there are growth opportunities it can tap into:
“The Group continues to see significant growth opportunities across both the eFulfilment and Public and Industrial sectors, alongside its resilient and high-performing foundation sectors: General Merchandise and Grocery and Consumer. Additionally, Wincanton is continuing with its development of technology for both warehouse automation and Transport Control Towers to significantly increase the value the business creates for both its customers and shareholders over the medium term. The Group remains confident in its strategy and its ability to deliver sustainable growth.”
Photo: Kicior99, CC BY 3.0, via Wikimedia Commons (image cropped)
