As the UK economy slows, people are sending fewer letters and parcels - which dented UK Mail's half-year figures. What's more, investors shouldn't expect much improvement any time soon. "These conditions have continued into the third quarter to date and we assume that the economic environment will remain tough throughout the current financial year," said chief executive Guy Buswell.
Mail revenues rose 9.2 per cent in the period to £93.8m, but the bulk of this came from passing on a 15 per cent Royal Mail price increase in May. The operating margin in the mail business was also hit by that price increase and fell 1.1 percentage points to 5.4 per cent. The parcels business saw 3 per cent revenue growth to £83.5m, but the mix shifted to lower-value customer packages causing the operating margin here to fall to 6.6 per cent from 7.9 per cent previously. Cashflow remained strong, however and, as the company approaches the important Christmas period, a new online consumer parcel delivery service has been launched.
Broker Investec Securities has downgraded its estimates and now expects full-year pre-tax profit of £15.1m, giving EPS of 20.2p (2011:£16.1m/21.2p).
UK MAIL (UKM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 210p | MARKET VALUE: | £114.9m | |
| TOUCH: | 205-214p | 12-MONTH HIGH: | 386p | LOW: 193p |
| DIVIDEND YIELD: | 8.7% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 109p* | NET CASH: | £11.6m | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 191 | 7.4 | 9.6 | 6.4 |
| 2011 | 202 | 6.0 | 8.1 | 6.4 |
| % change | +6 | -19 | -16 | - |
Ex-div: 30 Nov Payment: 13 Jan | ||||
