Tim Lawlor, CFO at Wincanton, gives his views on the year ahead
What have been the biggest challenges for your business over the past year, and what role did finance play in addressing them?
The logistics industry sits at the heart of the supply chain, so has to respond daily to the various challenges inherent in moving things from A to B. Our biggest challenge, however, is to constantly evolve our services to meet the changing needs of our customers and to respond rapidly to changing trends.
We have a broad customer base, so the specifics of what they need is far from uniform – our work varies from managing supplies in a Scottish shipyard building an aircraft carrier to transporting milk or delivering furniture into people’s homes. Our job is to respond with ever more efficient and innovative solutions to the new challenges.
Finance has been central to these challenges in two ways. First, we have been able to build a solid financial foundation for growth, including establishing a strong balance sheet position, with the disposal of non-core operations, significant debt reduction, the reintroduction of dividends after a five-year hiatus and continuing to service our pension scheme commitments.
Second, finance is at the forefront of developing new commercial models that meet customer’s changing requirements of their suppliers while ensuring appropriate levels of risk transfer.
What are the key political and economic risks/opportunities you face in the year ahead?
Like the rest of the UK business community, we are closely monitoring how the political surprises of 2016 may materialise in the marketplace. We are fortunate to have a resilient business model without highly volatile demand for our services, and with over 95% of our business being in the UK since our ‘own Brexit‘ in 2012 we are less exposed to the withdrawal from the EU and whatever US political upheaval may be coming.
Our main focus is on understanding what these will mean for our customer base – what will be the impact and what may be required in response? We have to be ahead of the game; proactive in proposing solutions and promoting opportunities that may arise from the ever changing political and economic landscape.
Which investments will you be focusing on in 2017?
As the largest British logistics business, ongoing investment and continuous improvement will be crucial for us to maintain our position and to continue to grow. Two particular types of investment will be the focus:
Firstly, making investments in areas that enable us to utilise our expertise in growth sectors such as e-commerce. For example, this year we have worked with a major wine retailer to develop their e-commerce strategy and provide the support necessary to launch a multi-channel offering; And secondly, we will make further investments in assets that enable collaborative working, where we can ensure higher levels of asset utilisation than a customer is able to achieve on their own.
These will include assets such as specialist fleet – for example, we are currently in the process of acquiring around 100 ready-mix cement vehicles.
How do you expect the balance of your role to change in the coming year; between compliance and forward-looking/strategic? And why?
Although Wincanton has resolved some difficult legacy issues and has moved into a much stronger position over the last few years, the importance of an effective control environment remains as important as ever. The reality is that compliance, strategy and business support are not mutually exclusive and we have to balance our support of new opportunities with assessments of risk.
I’d expect that our finance team spends a greater proportion of time on commercial activity in the coming year which will include compliance activity as we need to ensure that we can come up with the right commercial propositions for our customers that get a mutually advantageous result, including bringing healthy financial returns with the appropriate level of risk.
What message do you have for other FDs for the coming year?
This is an ideal world for procrastinators. There is so much uncertainty around and there will always be good reasons for delaying decisions, turning down requests for approvals and not taking action.
We could all sit around, pontificate, justify doing nothing and adopt a “wait and see” approach. That is not going to be helpful for the business, for the economy or for the country.
Uncertainty will not go away. Existing uncertainty will be replaced by new uncertainties. As a result, we have to have some courage, get on and take decisions based on the best information that we have, recognising that not every decision will be correct but that we’ll be better off than if we procrastinate. At Wincanton, we plan to get on with what we do best: providing innovative and efficient supply chain solutions.