Business Post steps up pressure on Royal Mail

Business Post, the postal services company, said its turnover had risen 13 per cent in the first quarter of 2007 compared with the same period last year.

In an interim management statement ahead of Tuesday’s annual general meeting, the company said its struggling parcels business was “making progress in an increasingly competitive market” while other parts of the business were performing strongly.

Business Post’s parcels contract with Federal Express, worth about GBP 20m in revenue and GBP 2m in operating profit, was terminated on April 30. If the revenues from this contract were excluded, the company’s underlying revenue increase for the first quarter would have been 18 per cent, the company said.

More than 10 per cent of the 20bn items posted each year in the UK are now handled by private sector contractors. Business Post handles more than one in 20 letters posted in the UK.

Business Post said it had managed to minimize the disruption caused by the Royal Mail strike at the end of June.

The company said when it announced its full year results in May that it had more than doubled revenues of its UK Mail operation in the year to March 31 2007 to GBP 90.3m, following the full opening of the letters market to competition at the start of last year.

In May, the company said its operating profit from UK Mail also doubled from GBP 3.2m to GBP 6.4m after investing a further GBP 4m to increase sorting capacity.

The group’s turnover was GBP 325.6m in the year to March 31, compared with GBP 278.2m the previous year, and profit before tax was GBP 9.8m compared with GBP 4.7m the previous year.

Tuesday’s statement contained no information on the company’s expected profits or dividends.

Business Post now has more than 400 customers, including Prudential, which the company won in June, the BBC and the Department for Work and Pensions.