Wincanton’s contribution to its pension fund is likely to be reduced at the next triennial valuation in March, reckons broker Liberum.
Even under a conservative assumption, the uplift to equity free cash flow could be more than 50% in 2024, with the base case implying an increase of more than 70%
If the logistics group is able significantly to reduce its payments, it will have the full range of options for deploying the improved cash flow, said the broker.
“We see scope for increased organic investment, especially in warehouse automation and robotics, bolt-on acquisitions to add or bolster key capabilities (such as integration of automation and robotics into warehouse and customer systems), and enhanced payouts to shareholders.”
In particular, Wincanton is likely to focus on autonomous robot technology in its warehouses, said the note, as is being implemented at some of its Cygnia Logistics sites
'Buy' is Liberum’s recommendation with a 500p target price.
Shares were down 1.5% at 301p.