Wincanton sees FY profits in line; in JV with Asia-based Kerry Logistics UPDATE

Wincanton sees FY profits in line; in JV with Asia-based Kerry Logistics UPDATE

	Published : Mon, 26 Mar 2007 10:40 By : Agencies Print this Story

(Adds company comment, detail on JV)

LONDON (AFX) - Wincanton PLC said it expects its full-year profits to be in line with expectations, as strong momentum at its UK and Ireland business continued into the second half.

The supply chain company said moving ahead, it will have ground to make up in the UK and Ireland for contract losses, but its development pipeline remains very encouraging.

'The momentum of contract gains outweighs the contract losses,' group finance director Gerard Connell told AFX News in a telephone interview this morning.

Home delivery group Lane and construction logistics company RDL Holdings, both acquired in October 2006, are performing in line with expectations and are now substantially integrated into the group, Wincanton said.

In mainland Europe, Wincanton has closed its loss-making Spanish operation and it is selling the related freehold properties. The company's new management teams in France and Germany are starting to make progress, it said, adding that higher sub-contractor prices are being addressed through price increases.

Central and Eastern Europe are generating high levels of new business, although start-up costs are restricting profit improvement, it said. Wincanton is continuing to look for acquisitions in the region, Connell added.

Wincanton said it expects exceptional costs in the year mainly from the

closure of its loss-making Spanish operations and the integration of its UK

acquisitions, adding this should be offset by the proceeds from its

property disposals.

The supply chain company also unveiled a joint venture with Hong Kong based Kerry Logistics, to design and operate supply chains in and between Europe and Asia.

The 50-50 joint venture, which has been named Kerry Wincanton, is primarily a marketing agreement, Connell said. 'It will involve minimal levels of investment,' he said. 'The underlying companies will use their existing networks to deliver the services.'

The venture is targeted at retail customers bringing in goods from Asia which prefer to deal with a single entity rather than lots, he said, adding that one retail customer is already interested in the new service.

Wincanton was in a similar joint venture with global forwarding group Kuehne and Nagel (KN) from 2002, until KN acquired ACR Logistics, formerly Hays Logistics, in January 2006.

Kerry Logistics is part of the Kuok Group, an Asian conglomerate that includes a stake in the South China Morning Post amongst its holdings.

Wincanton's shares were up 2-1/4 pence at 362-1/4 at 10.15am.

paul.sandle@thomson.com

ps/wj

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