UK Mail Group reports 56% plunge in profits
UK Mail Group, which competes with bigger rival Royal Mail, said first-half pretax profit plunged in the first half of the year on problems with its new automated sorting hub in Coventry and lower contribution from its parcels unit.
The company reported a 56% drop in profit before tax and exceptional items down to £4.9 million from £11.2m a year earlier.
Revenue increased 4.5% to £237.6m in the six months ended September 30.
The private postal service company said in August that full-year results would be affected by the transition to its new automated hub in Ryton, near Coventry,
UK Mail chief executive Guy Buswell said: “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 company lowered its interim dividend down to 5.5p per share from 7.3p last year.