The recent British postal strikes helped Business Post to increase customer awareness of its rivalservices to Royal Mail, the company said yesterday as it announced its half-year results. The main
parcels business has meanwhile shaken off the loss of the FedEx distribution contract.Business Post, one of the leading independent players in the UK express and parcels sector,said that its group revenues for the half-year ending September 30, 2007, grew by 9% to £167million. Excluding the lost FedEx contract, revenue growth was 15%. Pre-tax profit improvedstrongly by 182% to £4.8 million.
Chief executive Guy Buswell said: “We have seen a significantly improved group performancecompared to a year ago, with like-for-like revenue growth of 15% and profit before tax (beforeexceptionals) up 50%. This has been driven primarily by further very strong growth in UKMail, good performances in the business-to-business segment, which makes up 80% of our parcelsbusiness, and in our pallets business.”
Under its aim of becoming the UK’s leading independent integrated postal group, Business Postwas developing an integrated mail and parcels network, and combining the sales, marketing andcustomer relations teams in its parcels and mail businesses, he added. The company also plans tooffer new products and services.
In the parcels business, H1 revenues dropped 8.1% to £86.8 million, but were up by 0.1% on alike-for-like basis excluding the revenues from the Federal Express contract that was terminated inApril. The parcels operating profit dropped slightly to £6.5 million, including a £0.8 millionimpact from the lost FedEx contract. The parcels operating margin increased by 0.5% to 7.5%.
Business Post said that its B2B segment, representing 80% of parcels revenues, saw 5% revenuegrowth but B2C revenues dropped 8% due to strong competition. The company said it still sawattractive opportunities for premium B2C services. Major H1 developments in the parcels businessincluded further operational cost reductions, new automatic signature capture for real-time datacommunications and the acquisition of four franchises, leaving just 12 franchises outside companyownership.
“Overall, the focus in our parcels business is to achieve revenue growth in those areas thatoffer the most attractive returns whilst driving the efficiency of our operations to reduce ourcost base. We believe that the achievement of these two objectives will allow us to progressivelyincrease parcels margins,” the company said in its H1 report.
The postal subsidiary UK Mail grew strongly in the first half-year, increasing revenues by59% to £59.6 million and improving its operating profit by 65% to £4.3 million. The profit marginrose to 7.2%. New customers included Abbey, HBOS and Virgin Media, and business was increased withexisting customers. In September 2007, UK Mail handled 130 million mail items, representing some7.5% of the total mail market by volume, compared to 5.5% in March.
Business Post said that the industrial action at Royal Mail had not impacted on revenues orits ability to collect mail from customers, sort and hand over to Royal Mail for the “final mile”delivery. Although the £6.6 billion British mail market was not expected to grow overall, UK Mailcould increase its market share and offer new services such as a next-day product from January, thecompany said.
Meanwhile, the Times newspaper cited Buswell as calling for Royal Mail to be split up, withits delivery network to be separated from the letters sales operation, in order to avoid conflictsof interest. UK Mail competes with Royal Mail for business customers but uses the delivery networkunder a downstream access agreement. Referring to the recent postal strikes, Buswell said: “Interms of getting known, the strike has helped us a lot because people are aware there iscompetition. Small businesses in particular are showing more interest.”
In its Specialist Services, UK Pallets increased H1 revenues by 3% to £15.2 million but thecourier business UK Today saw revenues drop 10% to £5.7 million. New management has been appointed,and the courier operation will be renamed to UK Mail to benefit from group synergies, the companysaid.
