UK Mail sees challenges and opportunities ahead
In presenting UK Mail’s year-end results today, CEO Guy Buswell said that the “first half of the new financial year will be challenging”, but there are also “significant opportunities” ahead. The group revenues for the year ended 31 March 2015 were £485.1m – up 0.8% on the £481.4m achieved in 2014. Group profit before tax was £21.0m, down 4.2% on 2014 (but this comparison excludes the performance of the now discontinued UK Pallets division). Statutory profit for 2015 was £5.1m, down from £17.5 million in the previous year, and the company reported a net debt of £5.2m, compared to a net cash balance of £27.0m in 2014.
UK Mail said that the collapse of City Link in the fourth quarter led to a significant increase in its parcels volume – but while this brought more business, it also led to “increased operational costs in [the] short term due to capacity constraints”.
These “capacity constraints” for parcel handling, however, are now being eased with the opening of UK Mail’s new “Super Hub” in Ryton-on-Dunsmore, Coventry. The size of the 187,000 square foot warehouse and the new equipment that the company has installed will enable UK Mail to handle up to 24,000 parcels per hour. UK Mail started moving staff to the site in late February and the company expects that it will really start to see the benefits of the new facility in the second half of this year, once the full transition has been completed.
Commenting on the results, Buswell said: “After a strong period of growth, with the volume of parcels handled within our business doubling over the past five years, UK Mail is in the midst of a period of major investment and transition at a time when our markets are undergoing significant change. All this has created some inevitable challenges but also significant longer-term opportunities.
“Our investment in a newly constructed, fully automated hub at Ryton near Coventry is the largest strategic development in UK Mail’s history, bringing extra capacity and reducing operating costs across our business and setting us up very well for our next stage of profitable growth.
“We see significant opportunities in both the parcels and mail markets, in part from the changing competitive landscape and our strong value-added positioning within it, and in part from the new initiatives we continue to pursue such as imail, imailprint, and the opportunity to expand significantly in the packets market.
Looking forward, Buswell added: “The first half of the new financial year will be challenging as we reposition our parcels business and manage the full transition to the new hub. This, together with the implementation and roll-out of the new automation, will result in performance for the year being more weighted to the second half than usual.
Buswell concluded by saying: “The medium and long term outlook for the Group remain very positive.”
