Business Post's UK postal arm overtaking Parcels

Business Post predicts its UK Mail postal arm will overtake its parcels business in the next three to five years. Chief executive Guy Buswell says that UK Mail generates 27% of the revenue for the company and this fits in line with Business Post’s growth strategy to become “the leading integrated postal operator”.

Business Post’s preliminary results for the year to March 2007 show the company now has a cash balance GBP 12m, up from a GBP 0.4 overdraft in 2006. Group revenue grew by 17% to GBP 326m, from GBP 278m in 2006. Pre-tax profit nudged up to GBP 11.5m in 2007 from GBP 11.4m, while operating profit grew to GBP 12.1m.

But revenue for the company’s parcel business slipped by 1.2% to GBP 194m, while UK Mail’s revenue soared by 124% to GBP 90.3m.

Buswell says the company has “done an awful lot within a year”, referring specifically to the take-back of 11 franchise operations into corporate ownership. “The key thing for us was to take those businesses and turn them around to at least break-even, and we’ve done that,” he says. Business Post has 16 remaining franchise operations, but these are all profitable businesses.

Buswell tells Motor Transport that after stabilising the parcels business, the company aims to make it “as good as it used to be”. He adds that UK Mail currently has a 5.5% share of the 22.5 billion item marketplace, so there are “many growth opportunities”.

Buswell says that while the terminated Fedex contract, the cost of which Business Post had “removed by April 2007”, has not been replaced, its UK Mail contract wins, including the BBC and the Department of Work and Pensions have filled the gap the GBP 20m Fedex contract left.

The company’s pallet operation UK Pallets grew revenue by 5.8% to GBP 29.1m but courier service UK Today has had its management team replaced after a “bad second half”, Buswell says.