Business Post used its half-year results to highlight its financial strength and growth opportunities. However, scope for caution remains over the cyclical nature of some of its key operations.
At the top of the list of concerns is the parcel business, which generates 46 per cent of revenue. The group generates over 80 per cent of its parcel revenue from business-to-business customers, so a recession should hit demand hard. What's more, the benefits enjoyed by Business Post from the bungled management of Rentokil's CityLink business may be coming to an end following action taken by Rentokil's respected new executive team.
That said, management points out that the UK Mail business is thriving and, following 34 per cent turnover growth in the period, now accounts for 41 per cent of the total. Product innovation is pulling in new customers and 70 per cent of mail volumes dealt with by the division comprise regular statements or statutory notifications, which should remain resilient in the slowdown. The courier business is also winning work, thanks to its newly established national coverage.
Broker Seymour Pierce predicts full-year pre-tax profit of £16.9m, with EPS of 21.9p.
| Business Post (BPG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 275p | MARKET VALUE: | £150.4m | |
| TOUCH: | 274-275p | 12-MONTH HIGH: | 375p | LOW: 227p |
| DIVIDEND YIELD: | 6.3% | PE RATIO: | 18 | |
| NET ASSET VALUE: | 93p | NET DEBT: | 4% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2007 | 167 | 4.80 | 6.10 | 6.40 |
| 2008 | 195 | 6.00 | 3.80 | 6.40 |
| % change | +17 | +25 | -38 | |
Ex-div: 3 Dec Payment:16 Jan | ||||
