UK Mail’s long-serving CEO, Guy Buswell, today quit after being forced to issue two profit warnings this year due to major problems at its new hub which sparked a slump in the company's share price.
The British parcels and mail company announced that Buswell, who had been chief executive for 10 years, “has stepped down from the board by mutual agreement, and will be leaving the company with immediate effect. A search for his replacement has already commenced.”
Peter Kane, Non-Executive Chairman and the company founder, has become interim Executive Chairman with immediate effect and will run the business until a new CEO has been appointed. Kane said: "The board and I would like to thank Guy for his contribution to the company over the past 10 years in his role as Chief Executive and wish him well for the future."
The dramatic move came just one week after UK Mail had to make its second profit warning this year due to major operational problems following its move to a new central hub this summer which caused half-year profits to drop sharply. In response, the company's share price dropped 17% on the day and has continued to slide since then.
UK Mail relocated to the £35 million new hub at Ryton, near Coventry in central England, in July. But in early August the company admitted it was facing major operational problems because a high proportion of its parcels could not be automatically sorted as planned since they were too large for the sorting system, forcing them to be handled manually at additional cost. The company had aimed to increase automatic sorting from just 20% of parcel volumes to 80% via new sorting systems.
The listed British parcels and mail group warned last week that it could take up to a year to solve the problems caused by the hub move and emphasised that it would be handling the forthcoming additional peak season volumes “very carefully” with a focus on profitability and service levels. The company admitted: “It will take long than originally anticipated to resolve the issues but we expect to achieve this over the next 12 months.”
The company increased revenues by 4.5% to £237.6 million in the April – September first half of the 2015/16 business year. But pre-tax profits slumped from £12 million to just £2.2 million, including net exceptional cost of £2.7 million from the hub relocation.
The parcel business increased half-year revenues by 5.3% to £124 million with a 9% rise in average daily volumes resulting from new customer wins and more B2C business. But this changed sales mix and higher operating costs meant operating profit declined to £7.9 million from last year’s £12.6 million.
Buswell stated last week: “Our expectations for the current year 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.”
The company stated today that “the board's expectations for the current and the next financial year remain as set out in the Interim Results released on 18 November 2015.”
