Bulk mail delivery operation booming

Birmingham-based Royal Mail rival, Business Post, is growing its operations at 15 per cent, even before January’s move to end the postal monopoly.

Chief executive Paul Carvell said he expects the company to double its annual turnover after it gets a full licence to help in the delivery of bulk business mail.

He said: ‘I still believe that our goal of three per cent market share, of a market worth pounds 5.3 billion, is possible.

‘At the end of the third trading year, that would equate to about pounds 150 million at today’s rate and about the same size that we are now.

‘We would double with mail.’ Postcomm’s decision on the group’s access to Royal Mail’s delivery network is due to be published by the end of December.

The outcome will affect the group’s UK Mail division which collects mail from business customers, initially sorts and trunks them, before delivering to the relevant Royal Mail depot for local sorting and final delivery.

Mr Carvell said he had every confidence the proposal would get the go ahead by the regulators.

In the six months ending September, sales were pounds 73 million, up from pounds 63 million, with pre-tax profits up six per cent to pounds 7.1 million.

‘We have had a good run,’ said Mr Carvell.

‘We have been described as a bit of a beacon in an otherwise undistinquished market,’ he added.

Business Post said last year’s soft economy, in which it grew by only four per cent, caused it to pull its finger out in a bid to achieve ‘very high service levels and become more attractive to new customers.’

The increase in turnover reflects strong growth in the group’s core Express business, it said.

Sales at the division grew by eight per cent, ahead of the industry average.

Business Post said its good fortunes also came on the back of its rapid development of its newer and smaller businesses, such as HomeServe and UK Today, and the benefits from its contract with FedEx which started in September last year.

HomeServe, the home delivery business, has doubled its turnover in the last six months, fuelled by consumers spending more on electrical goods such as computers and designer clothing.

In the six weeks since the half year end, sales have risen 15 per cent on a like-for-like basis.

The interim dividend rose 5.7 per cent 5.6p and shares closed up 14 1 /2p to 368 1 /2p.