Half-year results from UK Mail, formerly Business Post, told what has become a familiar story from listed companies: trading has been hit by the recession; cost-cutting has helped support profits; trading has shown signs of stabilising; but the outlook remains uncertain.
The most resilient parts of the group were the UK Mail postal business and the courier operation. Indeed, the mail operation managed to increase both first-half revenues and operating profits by over 5 per cent to £85m and £5.9m, respectively. About 70 per cent of its business is generated from posting out statements and statutory notifications, which has helped insulate trading. However, as the deregulated mail market matures, growth rates are slowing. So management plans to focus on product innovations and doing more work for existing customers to help continue drive up mail volumes from the current 17m items a day.
At the parcel division, cost savings helped offset the impact of a 10.7 per cent decline in revenue to £80m, so operating profit was only marginally down at £6.3m. Investment in automation should also benefit the bottom line in coming years. The specialist services division benefited from focusing on more profitable courier business, which helped lift profits from £1.2m to £2m.
Broker Investec is forecasting full-year adjusted pre-tax profits of £17m and EPS of 21.8p (£17.5m and 22.3p in 2009).
| UK Mail (UKM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 330p | MARKET VALUE: | £180m | |
| TOUCH: | 325-333p | 12-MONTH HIGH: | 376p | LOW: 208p |
| DIVIDEND YIELD: | 5.2% | PE RATIO: | 15 | |
| NET ASSET VALUE*: | 98p | NET CASH: | £3.6m | |
| Half-yearto 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 195 | 5.9 | 3.5 | 6.4 |
| 2009 | 188 | 7.0 | 9.2 | 6.4 |
| % change | -3 | +19 | +163 | - |
Ex-div: 2 Dec Payment: 15 Jan *Includes intangible assets of £11.4m, or 21p a share | ||||
