Wincanton shares plummet after it loses post-Brexit customs contract

Shares in British logistics group Wincanton plunged by a quarter on Tuesday after the company said it lost a £71mn government contract that involved managing post-Brexit customs arrangements.

The London-listed supply chain services business said it would no longer manage UK border points at Holyhead and Sevington, sending its share price plunging 26 per cent to 226p by Tuesday lunchtime.

The more than £100mn hit to Wincanton’s market value from Tuesday’s move leaves the company’s shares about 50 per cent lower than their peak in 2021.

The loss of the contract with HM Revenue & Customs, which Wincanton said involved processing road-based freight, will hit profits, which the group said would be “materially lower” than expectations.

The company, which provides warehouse and delivery services for retailers, added that a fall in consumer spending would also dent earnings, which are expected to drop below market expectations in the year to March 2024.

The group, like its peers, had cashed in on booming demand for online shopping deliveries during the Covid-19 pandemic, sending its shares soaring about 80 per cent in the year to May 2021.

Since the decline in consumer spending because of the cost of living crisis, the group has increasingly relied on its public sector business, making the loss of the HMRC contract a heavy blow.

It said the loss of the HMRC contract was disappointing after the group delivered a “strong performance” in “exceptionally shortened timescales”.

However, the company said it still held “major contracts” with HMRC and the UK government’s environment and health departments.

The group said it had been involved in tackling issues caused by the UK’s departure from the EU customs union in 2020, which introduced a series of logistical complications for goods arriving into the country.

Since taking on the lost HMRC contract, Wincanton said it had helped enable “how business is done in the UK post-Brexit”.

The company said that the contract would be switched to a new business in June, but did not comment on why the government had changed suppliers.

Before today’s announcement, Wincanton calculated that the market was expecting pre-tax profits of £63mn in the year to March 2024, about 9 per cent higher than forecasts for the current year.

HMRC did not immediately respond to a request for comment.