Clipper Logistics lifts expectations, acquires life sciences platform Wippet
Clipper Logistics upgraded its medium-term expectations on Monday, following a solid year of trading, as it also announced the acquisition of life sciences-focussed Wippet and an extension of its Europe contract with Asos.
The London-listed firm said it had continued to perform strongly throughout the year ended 30 April, with full-year EBIT set to be in line with expectations of £31.6m, making for an underlying increase of 53% over the 2020 financial year.
It said it expected revenue of £698m for the year, 39% ahead of the prior year, driven by a combination of organic growth and new contract wins.
The board said the “structural shift to online” accelerated during the year due to the Covid-19 pandemic, adding that it expected to see continuing momentum in e-fulfilment activities after the coronavirus crisis.
Non e-fulfilment also performed strongly, driven by new contract wins as retailers looked to outsource, collaborate, and share costs, which played well to Clipper's shared-user network in its role as an enabler of retail.
Clipper’s core e-fulfilment and returns management services saw a “significant number” of new contract wins during the year including River Island, Mountain Warehouse, Joules, Revolution Beauty and JD Sports in the UK.
It also extended into a new geography with a new contract with FarFetch in the Netherlands which started in April, as well as recording strong e-commerce growth in mainland Europe.
The company said it also supported a number of retailers in delivering into Europe efficiently, in the post-Brexit trading environment.
Clipper said it continued to have a “strong” new business pipeline.
Looking at the acquisition of Wippet, Clipper said it was intended to “support and extend” its reach into the life sciences vertical, with Wippet preparing to launch an online business-to-business marketplace to service the broader healthcare sector in the UK.
The board said the new investment was aligned to Clipper’s strategic intent to extend its penetration into the life sciences sector, which it previously highlighted as a “potentially significant” growth opportunity.
Wippet would launch in September as an online marketplace initially targeting buyers from the fragmented elderly care market, which is a sector worth up to £2.5bn a year, alongside vendors which sell to more than 5,500 care homes across the UK.
Orders through the platform could either be fulfilled by Clipper or directly by the vendor, and over time, the firm said there were potential opportunities to expand the platform internationally, and to extend the marketplace to other sectors.
Additionally, Clipper announced a new three-year extension to its contract with online fashion giant Asos which will see that client further consolidate its mainland Europe returns to Clipper's facility in Poznan, Poland.
As a result, the company said it would grow its Asos-related headcount to 700 full-time equivalent staff members at the Poznan site, from 350.
Looking ahead, Clipper’s board said it remained confident in the company’s prospects for the new financial year and over the medium-term, and expected that the current momentum from new and existing contract wins would continue given the acceleration in the structural shift to online.
Given the continued strong trading momentum and pipeline of contracts wins, the directors said they expected EBIT for the 2022 and 2023 financial years to be ahead of company-compiled consensus by mid-single digit percentages in both years.
On the back of that strong trading momentum and cash conversion, Clipper said it had reduced net debt to £17.0m at year end from from £45.1m a year earlier, making for a net debt-to-EBITDA ratio of 0.4x, representing “significant headroom” against its net debt covenant of 2.5x.
“The 2021 financial period has been an unprecedented year which demonstrates again the strength and resilience of our model and the ability of Clipper to deliver a strong performance in the rapidly changing e-commerce and retail environment,” said executive chairman Steve Parkin.
“We have enabled retailers to overcome challenges and adapt quickly by rethinking the way to operate both their online and bricks and mortar channels.
“Additionally, we have entered the life sciences sector in support of the NHS and care sectors, providing fulfilment of vital supplies.”
Parkin said the “uniqueness” of the firm’s end-to-end solutions, combined with its “agile and able” culture, had accelerated its contract wins in the UK and mainland Europe.
“We are very well positioned to further accelerate growth by capitalising on the structural shift to online and to position Clipper as a global e-commerce and retail logistics enabler.
“As such, we are pleased to upgrade our guidance for both the 2022 and 2023 financial years.”
At 0830 BST, shares in Clipper Logistics were up 3.6% at 806p.