HS2 settlement puts UK Mail relocation on the right track
LOGISTICS firm UK Mail has said it will look to begin work on its new Birmingham hub early in the New Year following agreement on a compensation package due to the existing warehouse needing to make way for the route of the HS2 rail line.
The company is looking to progress the automation of its parcels business but the move is dependent on the timing of the new hub.
In its interim results statement, UK Mail said: “The timing of our plans for automation is linked to the relocation of our Birmingham hub which is required due to the HS2 rail link.
“Following Parliamentary approval of the Paving Bill for HS2, we expect to complete our contract with HS2 and for it to become unconditional in December 2013. Subject to receipt of planning consent, we would expect construction to start in early 2014 and to be completed by the autumn of 2014.”
The company said its expectation was the automation programme will cost around £20m, the investment being incurred during the course of the current and next financial years.
“We have spent £0.5m in the first half of this year with a further £4.5m planned for the second half with the balance to be spent in the next financial year,” it added.
It is expecting to make a double digit net return on the automation investment and it said the plan was for the automated sortation to go live in early 2015 with the full benefits of this being achieved from September 2015 onwards.
It has not disclosed details of the compensation settlement with the Department for Transport regarding the Bromford site. Neither has it indicated where the new hub will be.
However, it added: “We expect that our capital contribution to the building of the new hub will be some £10m which covers the enhancement of the site and building beyond the scale of the current facility. Of this amount some £5m will be incurred in the second half of this financial year with the balance in the next financial year.”
The expenditure on the new hub together with the automation expenditure will be covered from existing cash resources and new bank facilities.
The firm’s interims show group revenue rising almost 8% during the first half to £243.4m (2012: 225.7m). Pre-tax profit rose 63% to 11.9m (2012: £7.3m). Earnings per share rose 69% to 17p (2012: 10.1p).
Chief executive Guy Buswell said the group expected that the rate of year-on-year Parcels volume growth would moderate in the second half compared to the first, as the company we annualised the higher growth achieved in the second half of last 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. We therefore remain confident of good progress for the remainder of 2013 and a positive outcome for the full year,” he said.
