British parcels and mail group Business Post has improved half-year profits despite the worseningeconomy, is launching a new postal service and is open to acquiring struggling rivals.
The company increased revenues by 16.3% to £194.5 million (€230.5 million) in the six monthsending September 30, 2008. Operating profits rose 22% to £6.1 million, and pre-tax profits were up25% to £6 million.
Guy Buswell, Chief Executive, said the company had made “satisfactory progress” in the firsthalf of the year. The re-branding of all parcels, mail and courier services to UK Mail wasproceeding, with the vehicle fleet now fully re-branded and integration of management andoperations ongoing, he noted.
But he added: “We are clearly entering a more challenging economic period. However our model,underpinned by a strong balance sheet, is robust. We are successfully developing our businessstreams across a broader base of activities and with a focus on longer term contracts in areas lessdirectly exposed to levels of economic activity.”
In an interview with Reuters, Buswell commented that the company was “open to suggestions”for making acquisitions to consolidate the UK parcels industry. “One or two operators are quiteindebted and will probably struggle,” he said.
The parcels business increased revenues by 2.6% to £89.1 million but its operating profitsdropped 4.6% to £6.2 million, and the operating margin fell by 0.5 percentage points to 7%. B2Bparcels, representing 82% of revenues, increased by revenues up 6.1%, driven by high levels ofcustomer service and innovative product offerings, the company said. B2C parcel revenues declined2.7% as the operator re-focused on premium service customers.
To reduce costs, Business Post has downsized its vehicle fleet by 10% and cut back ontemporary agency labour staff by 10%. Fuel surcharges are now also being updated more regularly topass on higher costs more quickly to customers. Looking ahead, Business Post said it was cautiousabout the second half-year for its parcels business due to the economic environment and wasimplementing various efficiency measures, including further fleet reduction.
The fast-growing postal business, UK Mail, increased H1 revenues by 34.4% to £80.1 millionand improved its operating profit by 30% to £5.6 million. Its market share is now 13% in terms ofvolumes collected. “UK Mail has achieved good growth in revenues and profit, driven by new businesswins and further mail volumes from existing customers,” Buswell said.
The company also announced the launch of ‘imail’, a hybrid postal service enabling largecorporate businesses, SMEs and consumers to send mail directly from computers for physicaldelivery. Using a software package, customers can send letters electronically until 18:00 to thenearest UK Mail sorting centre to be printed, enveloped and sorted for next-day nationwidedelivery. The service will reduce customer postal costs by 60% and cut the carbon footprint by 80%,according to the company.
