Business Post experience slow down
Technology weakness hits Business Post
By Andrea Felsted
Published: May 24 2001 18:36GMT | Last Updated: May 24 2001 19:12GMT
Business Post, the express parcel and mail delivery group, warned that weakness in the technology sector would hit growth in the first half of this year.
But the company said cost-cutting initiatives, as well as a five-year partnership with FedEx Express, would bring benefits in the second half. The shares fell 19p to 222-1/2p.
Paul Carvell, chief executive, said overall volumes in the first six months would be flat, reflecting the weakness in the technology sector. “Since the Christmas period, we have seen a bit of a weakening in technology volumes. The first half of our financial year is inevitably going to feel some impact of that weakening,” he said.
He estimated that 40 per cent of the company’s top 100 customers were in the technology business. However, Mr Carvell said several revenue generating and cost-cutting initiatives would be put in place.
In addition, he said the agreement with FedEx, which begins in September, would increase turnover by 10 per cent.
He said that despite the cautious outlook for the first half, Business Post expected growth in both profits and turnover in the full year.
The comments came as Business Post reported a fall in pre-tax profits from £16.5m ($23.4m) to £12.7m in the year to March 31. Turnover rose from £114.3m to £123.7m. Mr Carvell attributed the profits fall to an increase in staff and fuel costs in the early part of the year.
He said Business Post had also anticipated a greater level of turnover than had materialised and so margins had been squeezed. However, they had then recovered, he said.
Business Post also said that Neil Benson would retire after five years as chairman. Peter Kane, one of the two brothers who founded the company, will become non-executive chairman in July.
Mr Carvell added that Business Post was considering applying for a licence to compete with Consignia in the delivery of mail with a value below £1.
Analysts are forecasting pre-exceptional profits for the current year of £14m-£14.5m.
The dividend is maintained at 15.1p, via a 10.1p final, payable from earnings per share of 16.9p (21.9p).
