7th Aug 2015 06:26
LONDON (Alliance News) - Postal operator UK Mail Group PLC on Friday said its full-year results will materially miss market expectations after the group said the short-term challenges it faces are more severe than initially anticipated.
UK Mail said its parcel volumes in the first four months of its new financial year, starting on April 1, were up by 4% year-on-year, but the move to a new fully-automated facility in Coventry has resulted in a greater-than-expected level of customer churn and a higher-than-anticipated fall in volumes, along with an associated impact on its parcel revenue mix.
In addition, a higher proportion of current parcel volumes are incompatible with the company's new automated sortation equipment, meaning it has incurred extra operating costs and a delay to the full benefits of moving to automation.
The company said it is taking action to resolve those issues and remains positive on its medium-term outlook, but said that its results in the current financial year will be hit hard by the problems, meaning they will be materially below market expectations, with some of this to continue into the next financial year.
"This near-term setback to our financial performance is clearly very disappointing. However we are taking decisive action to address these issues and we are confident that they can be reversed," said Guy Buswell, UK Mail's chief executive.
By Sam Unsted; [email protected]; @SamUAtAlliance
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