UK Mail to close pallets business

DELIVERY firm UK Mail Group has announced it is planning to close its pallets business.

In a trading update covering the three months to December 31, it said its Fradley Park-based subsidiary UK Pallets has suffered declining profitability in recent years and was continuing to experience a number of challenges.
 
“As previously indicated, we have been actively considering all options for this business and a proposal has now been made to close it,” it said. 

“This process will be managed over some three months, ensuring that all employees and customers are properly supported. It is hoped that a number of employees would be able to take up alternative roles within UK Mail.”

UK Mail has not said how many employees are likely to lose their jobs as a result of the planned closure.
 
It estimates that the cash costs will be approximately £1m, with asset write downs of some £2m, including the residual goodwill that arose on acquisition. 
 
UK Pallets is the group’s smallest business, contributing 5.3% of group revenue and 2.3% of group operating profit in the year to 31 March 2014, and is run separately from the parcels, mail and courier operations. 

The firm said trading in its core businesses in the period in question 2014 has been in line with its expectations.
 
“Our core businesses have performed well with our parcels business successfully handling record volumes, and our network remaining robust, during the peak weeks running up to Christmas,” it said.
 
“The demise of City Link is likely to have a positive impact on the overall UK parcels industry.  We have taken on some volumes from ex-City Link customers but it will be some time before the longer term outcome, on our business and on the industry as a whole, can be properly assessed.”
 
UK Mail said its new hub in Coventry is on track for completion next week. 

The hub automation has been installed and is now entering a commission and testing phase ahead of implementation in May.