9th Jul 2014 07:12
LONDON (Alliance News) - UK Mail Group PLC said Wednesday that its overall first quarter performance was in line with management expectations as its Parcels division continued to benefit from strong growth in online shopping.
In an interim management statement for the period April 1, 2014 to June 30, 2014, the company said reported revenues for the first quarter role 2.5% on the same period in 2013. Underlying revenue was up 4.5%, although this was adjusted for there being one less working day in the period compared to the same period last year, said the company.
The Parcels business continued to perform well, with daily volumes for the quarter increasing by 10% on the first quarter in 2013. This volume growth was partly driven by an increase in home deliveries related to online shopping, with a continuation of the mix change towards B2C, as previously guided, said the company.
Daily volumes in its Mail business came in slightly higher than the comparable period, said UK Mail, which added that a number of new tenders are expected to lead to good volume growth for the remainder of the financial year. Courier and Pallet businesses showed revenue increases compared to the same period in the previous year, said the company.
Looking ahead, the company said that it expects Parcels volume growth to continue to moderate "as we annualise the higher volume growth achieved during the last financial year, reflecting the partial and temporary capacity constraints that we have previously disclosed, as we develop our new expanded and automated hub."
UK Mail is investing in improving its infrastructure and IT systems. It will move its head office and national hub to a newly built site next year, automating the hub in the process. That will further cut operating costs and create extra capacity. It said that it continues to made good progress with the project and is expected to be operational from May 2015.
It is also rolling out new scanning software to all its sites so that it can provide one hour delivery windows as it tries to get ahead in the key battle to offer customers better ability to track their parcels and prepare for delivery.
In May the company reported higher pretax profit for its last financial year and increased its final dividend, driven by further strong growth in parcels revenue and as investments in technology and efficiency improvements pushed up its profit margin.
UK Mail said pretax profit rose to GBP22.8 million in the year to end-March, from GBP17.8 million a year earlier, as revenue rose to GBP508.5 million, from GBP475.4 million. Full-year revenue growth was again driven by the burgeoning parcels market in the UK, which is being fueled by the rapid increase in online shopping volumes. UK Mail said parcels revenue increased 16% to GBP219.9 million, although mail revenue also increased 1.5%, to GBP245.3 million in the full-year.
Shares in UK Mail were trading 0.28% lower at 590.34 pence per share shortly after the market open Wednesday.
By Alice Attwood; [email protected]; @AliceAtAlliance
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