20th Nov 2013 08:09
LONDON (Alliance News) - UK Mail Group PLC, which competes with recently listed Royal Mail Group PLC in the UK mail market, Wednesday reported a sharp increase in profits for its fiscal first half, driven by a surge in parcels handling.
The mail and parcels business reported a pretax profit of GBP11.9 million for the six months to end-September, up from GBP7.3 million a year earlier, driven by a near doubling of operating profit at its parcels operations.
Revenues rose to GBP243.3 million, from GBP225.7 million, again driven by a 21.4% increase in revenues in the parcels business. Revenues from mail declined 0.3%, although UK Mail did manage to increase operating profit at the mail unit by 10.9% and the volumes of mail it handled actually increased slightly as it won new customers.
But operating profit at the parcels business surged, rising to GBP11.1 million, from GBP5.8 million.
Both UK Mail and Royal Mail are experiencing the same trends with the mail market slowly declining overall, although UK Mail is taking market share, while the parcels business is surging thanks to the increased popularity of shopping online.
UK Mail said it has been winning new parcels customers, and has been expanding its capacity so that it can handle the increased volumes, although it expects volume growth to moderate in the second half of the year.
"As we move into the peak period running up to Christmas, we will be highly disciplined in balancing our volumes with our capacity and our infrastructure, such that our very high service levels are maintained. In Mail, we expect our market share to continue to grow," it said in a statement.
It said it therefore remains confident of good progress for the remainder of the year and of a "positive outcome" for the full year.
Signalling its confidence, UK Mail increased its interim dividend to 7.1 pence, from 6.4 pence.
"This strong performance reflects the excellent progress made over the past three years. We have created a robust operational platform, strong competitive market positions, and we are a much more consumer-focused business," Chief Executive Guy Buswell said.
"We are now entering the next phase of strategic investment. With significant steps forward planned over the next two years in our capacity, customer-facing technology, IT infrastructure and automation, these investments will create the platform for the next chapter of growth for the Group over the coming years," he added.
UK Mail shares were up 3.4% at 605 pence early Wednesday. Royal Mail shares were down 3.2% at 532.4 pence after it was initiated at sell by UBS and Equal Weight by Barclays.
By Steve McGrath; [email protected]; @SteveMcGrath1
Copyright © 2013 Alliance News Limited. All Rights Reserved.
Related Shares:
RMG.LUKM.L