Shares in UK Mail (UKM) surged 10 per cent to a six-year high after the group reported strong full-year earnings growth, underpinned by a particularly impressive second-half performance from its parcels business. Volumes in that unit increased by 21 per cent, buoyed by the growth of online retail.
UK Mail even managed to increase volumes at its mail segment by 2 per cent. This stands in contrast to a 5 per cent annual decline in overall UK mail volumes in recent years due to the rise of email and social media. UK Mail increased its market share partially as a result of steep price increases from the Royal Mail. The Mail business, accounting for half of group revenues, turned in an operating profit of £10.7m - a 7.8 per cent increase on 2012. Operating margins were static on the previous year if you discount the 'pass-through' effect of the Royal Mail's 11 per cent price hike.
Management remains focused on keeping a tight rein on operating costs. Increased automation helped to boost operating margins at the parcels business to 8.6 per cent (from 6.7 per cent in 2012), which contributed to a 40.6 per cent rise in profits to £16.3m.
Investec anticipates current-year adjusted EPS of 26.6p (from 24.7p for 2013).
| UK MAIL (UKM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 510p | MARKET VALUE: | £279m | |
| TOUCH: | 500-520p | 12-MONTH HIGH: | 510p | LOW: 214p |
| DIVIDEND YIELD: | 3.7% | PE RATIO: | 21 | |
| NET ASSET VALUE: | 118p* | NET CASH: | £27m | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 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 | 17.5 | 18.2 |
| 2013 | 475 | 17.8 | 24.7 | 18.8 |
| % change | +11 | +38 | +41 | +3 |
Ex-div: 26 Jun Payment: 26 Jul *Includes intangible assets of £14.4m, or 26p a share | ||||
