Wincanton PLC shares plummeted yesterday, 7 March, after it announced that the UK government has dropped its £71mn customs contract and expects to miss market views.
A French company has won the contract for post-Brexit border checks, in a blow to hopes that domestic businesses would be prioritised in public procurement.
The outsourcer, Sodexo, has been selected in favour of Wincanton to run Inland Border Facilities by HM Revenue & Customs, The Telegraph has revealed.
Wincanton, the warehouse operator and haulier, told investors it was “extremely disappointed” at the decision. Its shares fell by nearly a quarter, wiping more than £100m from the company’s stock market valuation. It was reported that the original Inland Border Facilities contract was worth £71m to Wincanton.
The company said: “The contract will be transferred by June 2023. Wincanton is 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.”
Alex Paterson, an analyst at stock broker Peel Hunt said: “The retendering process did not take account of the quality of this work and was decided on price instead, where the group was undercut by an international operator.”
The decision to turn to Sodexo is likely to anger proponents of domestic procurement.
In a paper on the benefits of Brexit, the TUC complained that WTO and EU state and rules “are designed to prohibit the allocation of state resources that provide advantage to domestic enterprises”.
“However, within these rules, governments can deploy their resources to provide strategic support to their economies,” the paper found. “Public procurement could support growth of local jobs and businesses to support economic growth.”
Alongside the lost contract, Wincanton reiterated that it expects a more challenging environment in the coming financial year.
The company now expects pretax profit for the year ending March 2024 to materially miss market consensus, which it provided as being 63 million pounds ($75.8 million).
Sodexo last night declined to comment on the Inland Border Facilities contract. It directed inquiries to HMRC.
A spokesman for HMRC said: “The procurement process is still ongoing and will be announced through a Contract Award Notice once complete.”