Business Post expects to launch its UK Mail by April

Business Post expects to launch its UK Mail business by next April, to challenge Royal Mail’s dominance of business mail services.

The group, which provides mail and parcel delivery services to about 23,000 customers, also unveiled a 23% jump in turnover and a 13% increase in pre-tax profits in the six months to September 30.

The UK Mail service will collect post from business customers and undertake the initial sorting before feeding into Royal Mail’s system for local sorting and final delivery. Previous negotiations with Royal Mail failed to reach an agreement but Postcomm, the industry regulator, is expected to finalise a tariff for the service by Christmas.

Deutsche Post, TPG, and Hays are among other companies to have obtained licences to compete with Royal Mail. But Business Post hopes to be first to use Royal Mail for the “last mile” delivery of letters and parcels.

Paul Carvell, chief executive of Business Post, said he had been “extremely disappointed” by Royal Mail’s recent strike action but believed the new service would still present a “huge opportunity” for the group.

“It will provide access to a £5bn market and even a small slice of this could double the size of our company,” he said.

He added that the group’s newly acquired businesses, BXT and UK Pallets, were performing well, while Express, the core business- to-business parcel service, was continuing to gain market share.

HomeServe, a business-to-consumer parcel service that the group launched in 2000, saw sales jump two and a half times during the period.

Mr Carvell hoped to continue making acquisitions in the next year and planned to utilise the cross-selling opportunities presented by the group’s businesses.

Pre-tax profit rose from £7.1m to £8m, on sales of £89.4m (£72.9m). The interim dividend is increased 6.25% to 5.95p, payable from earnings per share of 10.5p (9.3p). The shares closed up 16p at 486p.