UK Mail Group has seen its average daily parcels volumes increase by around 6%, year on year, inthe past six months thanks to growth in e-retail home deliveries.
In a ‘pre-close trading update’ for the half year ending 30 September 2014, it said the groupas a whole had a satisfactory six months and the financial performance for the half year wasexpected to be “broadly in line with our previous expectations”. Reported group revenues for thefirst half are expected to decline by around 1% compared with the same period in the previous yearalthough, adjusting for there being one less working day in the period, underlying revenues areexpected to be in line with the previous year, UK Mail outlined.
“Whilst the first quarter showed good revenue performance, the second quarter has been morechallenging, with parcels volumes below expectations, particularly in the latter weeks of theperiod,” it added. “It is too early to assess whether this represents a more persistent trend andtherefore the extent of any possible impact on the full year outcome.
“In our Parcels business, average daily volumes for the first half are expected to increaseby some 6% compared to the same period last year. This volume growth has been driven partly by anincrease in home deliveries related to online shopping, with a continuation of the mix changetowards B2C.”
The company continued: “As previously indicated, the level of parcels volume growth hascontinued to moderate as we annualise the higher volume growth achieved during the last financialyear.”
It said revenues in the group’s Mail business were expected to be down by around 6%, due tomix changes, with average daily mail volumes around 2% ahead of the same period last year.
“We have experienced a mix change in the second quarter towards the lower revenue per itemCustomer Direct Access mail. This is due to new customer account wins which utilise thisservice.”
The group said its Courier business was “expected to show a satisfactory revenue increase onthe same period last year”. Meanwhile, its Pallets business was expected to report underlyingrevenues broadly in line with last year.
“This business, however, has suffered from increasing network costs which have resulted inthe overall performance being below expectations,” the company said. “Action is currently beingtaken to address this.”
The company said the group as a whole “remains in a sound financial position”, and itsstrategic investments were progressing to plan. “Our new automated hub remains on track to beoperational from May 2015, providing a significant step forward in how we operate; creating extracapacity and reducing operating costs,” the company said.
“Our focus over the period until May 2015 is to manage the transition of our business to thenew location and changed working practices whilst maintaining the underlying momentum in ourbusiness. With the strength of our market position, a well-invested, integrated and automatednetwork, and a growing suite of innovations and industry-leading products and services, we remainexcited about the medium term growth prospects for UK Mail.”
The group will report its interim results for the half year ended 30 September 2014 on 18November 2014.
