"We have a low cost base, we are taking market share and we are confident about the future." This is how UK Mail's chief executive Guy Buswell described the outlook for his business in what is a tough market with fierce competition. This caused underlying pre-tax profits to fall £1m to £15.1m and broker Investec is not expecting any recovery in the current financial year.
Reported profits in the 12-month period were hit by £2.2m in redundancy and property costs relating to the closure of four depots, bringing the total number to 50. Mr Buswell said he did not envisage any exceptional charges this year, but added that the business would always be looking to reduce costs.
UK Mail did manage to grow revenues, but this was mainly due to Royal Mail price increases on 6 May 2011, which accounted for over half of total revenue growth. However, these price rises were also responsible for half of the decline in operating margins in the mail business, which fell from 6.5 per cent to 4.8 per cent. Combine this with a 2 per cent decrease in mail volumes and operating profits in the company's largest unit fell 15 per cent to £10m. There was also a profit shortfall in the parcel business which suffered from the loss of a working day. The hope here is that an online service, launched in November, will generate higher returns.
UK MAIL (UKM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 240p | MARKET VALUE: | £131m | |
| TOUCH: | 233-246p | 12-MONTH HIGH: | 319p | LOW: 188p |
| DIVIDEND YIELD: | 7.6% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 111p* | NET CASH: | £18.4m | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 359 | 14.2 | 18.0 | 17.2 |
| 2009 | 386 | 16.0 | 16.5 | 17.2 |
| 2010 | 385 | 17.8 | 23.4 | 18.2 |
| 2011 | 396 | 16.1 | 21.2 | 18.2 |
| 2012 | 429 | 12.9 | 17.3 | 18.2 |
| % change | +8 | -20 | -18 | - |
Ex-div: 27 Jun Payment: 27 Jul *Includes intangible assets of £13.3m, or 24p a share | ||||
