UK Mail reports drop in profits
UK Mail has reported a drop in profits and advised that its expectations for the next financial year have “softened”. Reporting its performance for the six months ended 30 September, UK Mail said that group profit before tax (pre-exceptional items) was £4.9m – less than half the £11.2m posted for the same period in 2014. Post-exceptional profit was £2.2m, compared to £12.0m in 2014.
Revenues, however, were up 4.5% at £237.6m.
As previously reported, the company issued a profit warning in August, saying that its performance was being affected by the transition to its new national parcel hub in Ryton, near Coventry.
Guy Buswell, Chief Executive Officer of UK Mail, said: “The current period of major investment and transition will deliver significant long term benefits. However, as we advised in August, it has become clear that the near-term challenges associated with the transition have been more significant than first anticipated.
“Trading in the initial weeks of the second half, and overall trends within our individual businesses, have been in line with our revised expectations. Our expectations for the current year therefore remain in line with previous guidance. However, due to the timescales required to fully resolve the challenges, our expectations for the next financial year have softened slightly.
“Whilst this is disappointing, the strategic rationale for the transformation we are undertaking is as compelling as ever, and we are confident both of our ability to restore our parcels business to previous levels of profitability and to build from there. The medium term operational and financial benefits will place us amongst the most efficient and competitive operators in our market.”
The news of the disappointing six-month results saw UK Mail’s share price take a knock this morning.
Connor Campbell, senior market analyst at www.spreadex.com, told Post&Parcel: “Investors were the proverbial snarling dog to UK Mail Group’s timid postman this morning, with the company’s stock price plunging around 10% to a near 3 year low following news of an 82% slide in half year pre-tax profit.
“The subsequent profit warning makes it two in the space of three months for UK Mail Group, a woeful toll for even the most beleaguered of companies, helping to completely overshadowed the solid 4.5% increase in revenue to £237.6m.”
On Friday last week (13 November), another player in the UK parcel delivery market, the DX Group, also announced a trading performance which its own chief executive described as “disappointing”.
The industry will now be watching closely to see Royal Mail’s latest results, which are due to be released tomorrow (Thursday , 19 November).
