British express and parcels operator Business Post today issued a further profits warning,sending its share price down 11 per cent. The announcement increased speculation about the company’s
future following the recent resignation of Paul Carvell from the post of CEO.In a trading statement, Business Post said that in the period since its interim announcement onNovember 14, its expectations of margin improvements in the Parcel Services business, resultingfrom improved selling prices and lower costs, had not been achieved. The newly-appointed CEO, GuyBuswell, had made significant changes to the management team designed to simplify and streamlinethe management of the Group’s activities and provide greater focus to those areas requiring marginimprovement. A strategic root and branch approach was now being adopted to the development of thebusiness focusing on customer mix, service and cost control. These changes have already yielded animprovement in the quality of service provided to customers, the company stated.
Business Post said that a review of the franchise network had identified that further one-offinvestment of £1.5m was required in order to secure its long term future. Accordingly, it wasanticipated that the additional costs relating to the franchise network will be around £4.5m in thecurrent financial year. Consequently, the Board now expected profit before tax and exceptionalitems for the year to 31 March 2006 to be approximately £9m. This would be less than half theprevious year’s level. Exceptional items were expected to total £4.2m, comprising a provision of£3.2m against amounts owed by certain franchises relating to prior years, as previously disclosed,and costs of £1.0m for management changes.
Referring to its other businesses, Business Post said that trading in Specialist DistributionServices remained satisfactory. UK Mail continued to trade ahead of expectations, service qualityremained high and the Group was attracting significant levels of new business. The Group had astrong balance sheet and was well placed to fund further investment, in particular for UK Mail, thestatement said.
Following the announcement, shares in Business Post dropped 11 per cent during morning tradingon the London stock exchange.
