Business Post close period trading update
Business Post, the UK's leading independent express delivery company, proposes to announce its preliminary results for the year ended 31 March 2005 on Tuesday 17 May 2005 and today issues the following trading update.
Parcel Services
Express
The market for express deliveries has been challenging throughout the year. Against this background, Express has made good progress, and is expected to increase turnover for the year ended 31 March 2005 by nearly 6% (notwithstanding three fewer working days than in the previous year) representing a further increase in market share.
International
The market for cross-border shipments continues to grow at roughly twice the rate of domestic and, with the introduction of new services and strong new business growth, International is expected to increase its turnover by approximately 16% in the year ended 31 March 2005.
HomeServe
The Group’s focus on the rapidly expanding home delivery market has continued to yield success, and HomeServe is expected to increase turnover by approximately 50% for the year overall.
Network Services
Network Services is responsible for providing high quality collection and delivery services to the business units within Parcel Services and UK Mail through a network of owned and franchised sites.
In H2, in the run up to the Christmas peak period, Network Services incurred additional costs to ensure high quality service levels. However, more recently unit cost performance has returned to normal levels while maintaining high service quality.
UK Pallets
UK Pallets, acquired in July 2003, is the Group's national palletised goods delivery service, accounting in H1 for 10% of Group turnover.
Market conditions in the pallet network sector have been disappointing throughout the year, and further depressed by the poor trading experienced in the retail sector and parts of the building sector over Christmas and subsequently. The Board believes that UK Pallets has maintained its market share throughout this period, but turnover growth reduced from 18% in H1 to 14% in H2. The shortfall in sales growth and the additional cost of a hub extension from September 2004 have impacted on profits and, as a result, the full year profit contribution from UK Pallets will be around £0.8m. We expect an improved performance in the year to 31 March 2006.
Courier
Courier has continued to make good progress, in terms of both turnover growth and profitability, throughout H2. Turnover for the full year is expected to increase by 15% overall.
UK Mail
UK Mail, which commenced trading in May 2004, continues to make excellent progress. Market penetration has been achieved at a faster rate than expected, and UK Mail is currently handling an annualised 250 million items, approaching 1% of the market. Customers are of a much higher average size than originally envisaged and cover a broad range of sectors, the recent contract with Royal Bank of Scotland Group representing an encouraging entry into the VAT exempt market place. Because of the faster rate of progress, UK Mail is now expected to break even for the year overall, rather than incur a small loss.
Overall and outlook
Reflecting all the above, Business Post expects its turnover for the year ended 31 March 2005 to be in line with expectations but pre-tax profit (before goodwill amortisation) to be slightly below consensus market expectations of approximately £21.5m.
The Board’s overall outlook for the year ending 31 March 2006 remains unchanged.
