UK Mail growth assisted by Royal Mail price rises

UK Mail Group has said it is expecting to report a 3% growth in its adjusted revenues for the 2011 year, when final results are released later next month. The firm said in a pre-close statement yesterday that the final quarter of its financial year, ending 31 March, 2012, saw 8% growth in underlying revenues compared to the same quarter last year.

The revenue figures are adjusted for the increase in Royal Mail prices during the year – when including the price rise, UK Mail’s fourth quarter saw a 14% increase in revenues, while its full 2011 financial year saw an 8% growth in revenues.

UK Mail’s mail business had a “solid” final quarter and good growth in revenues, the company said, for both the quarter and the full year, driven by its business mail segment.

The company said its parcels business saw a 10% volume growth compared to the previous year, driven by home deliveries related to Internet shopping.

UK Mail said the growth in business-to-consumer parcels had caused some difficulties, restricting its revenue growth, while the current “challenging pricing environment” in the competitive parcels market was putting pressure on its margins.

The Birmingham-based company said it made further progress in restructuring its network during the year to reduce its fixed cost base. Four depots were closed, at a cost of GBP 2m, bringing UK Mail’s total to 50 depots.

The company said in its statement that it was in a “sound financial position”.

“We continue to assume that UK economic conditions will remain tough throughout 2012 and tight control of our costs will remain a key focus to offset the impact of the competitive pricing environment,” said the UK Mail pre-close trading statement.

“Our strategy remains to continue to build competitive advantage, developing and investing in our low cost integrated network and bringing to market new products and services to seek to drive profitable revenue growth.”