Business Post is delivering earlier
Business Post’s letter delivery division, which competes with Royal Mail in the partially liberalised UK postal market, is set to break even during its first year of trading, ahead of expectations.
UK Mail is handling the equivalent of 250 million items a year following its launch last May and has almost 1 per cent of the market, Business Post said in a trading update.
The service was set up by Business Post after Postcomm, the industry regulator, gave companies the right to enter the letters delivery market in 2003.
UK Mail collects and sorts mail from its business customers, including Royal Bank of Scotland and Powergen, and pays Royal Mail 13p a letter to deliver them to individual homes.
The division’s progress will enable it to break even for the year to March 31, instead of incurring a small loss as previously expected.
Business Post also reported good progress in its Express parcel deliveries operation, which accounts for 59 per cent of sales.
Turnover at the division is expected to rise by 6 per cent this year compared with 3 per cent 12 months ago.
Shares in Business Post fell 35p to 608p, however, after the company warned group profit would be “slightly below” market expectations following a “disappointing” performance by its palletised goods delivery service.
Turnover growth for the UK Pallets division, which accounts for 10 per cent of group revenues, fell to 14 per cent during the second quarter of the year compared with 18 per cent in the first half. Michael Morris, of Arbuthnot Securities, the broker, said that, while the pallets business was disappointing, “there is huge potential in UK Mail”.
