UK Mail struggles after snow prompts profits warning
MAIL and parcel delivery group UK Mail took a major hit on its share price today after it was forced to issue a profits warning following December’s bad weather.
The company, which has a large distribution centre in Birmingham, saw almost 8% of its share value wiped out in early trading.
In an interim management statement the firm said revenue during the first part of the final quarter of last year had been eradicated after the snow disrupted deliveries during December.
“As the third quarter developed, underlying volume growth was generally lower than expected across our parcels, courier and pallets businesses, with the traditional December pick-up not materialising. This was compounded by the snow in December causing disruption to our customers and operations,” said the statement.
“Whilst we were able to manage our operations such that over 99% of our Christmas parcel deliveries were delivered before Christmas, the weather meant that we incurred additional cost in our network to hold and deliver consignments.
“Overall, our parcels business increased its revenues marginally in the quarter, with revenue growth in the initial weeks of the quarter offset by the reduction in December.”
Last month’s disruption overshadowed the performance of the mail business, which saw good revenue growth throughout the quarter as the firm continued to gain additional mail volume from existing customers, together with new business wins.
“The result of these factors is that, whilst overall group revenues for the quarter have increased by approximately 4% year on year, we now expect group profit for the full year to be below previous expectations and broadly in line with last year,” added the statement.
It said it remained cautious about the economic conditions and hoped the adverse factors experienced during December were a one-off event.
In an attempt to boost confidence, it said: “Our business remains strong relative to our competitors and well positioned in its various markets.”
