U.K. Mail To Miss Profit Forecast

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Wall Street Journal – British mail and logistics company UK Mail Group PLC Wednesday said it expects to fall short of profit expectations following slower than expected trading and heavy snowfall during the winter.

UK Mail said volume growth in its parcels, courier and pallets businesses was lower than expected during its fiscal third quarter, beginning Oct. 1.

The company said an anticipated pick-up in demand in December failed to materialize, and a heavy snowfall in the U.K. made matters worse. Although it delivered 99% of its parcels before Christmas, coping with the snow pushed up costs.

The company said its mail business, which delivers letters, performed better during the quarter, and it picked up new clients and delivered more mail for existing customers.

The company said it expects profit for the year to the end of March to miss expectations but added they will be broadly the same as the previous year’s. UK Mail reported a pretax profit of £17.8 million ($27.8 million) for the year to Mar. 31, 2010, on revenue of £385.2 million, according to its annual report. Analysts expect the company to report a pretax profit of between £18.8 million and £19.5 million for fiscal 2011.

Company executives weren’t immediately available to comment.

Following the news, U.K. brokerage Investec lowered its fiscal 2011 pretax profit forecast for the company to £17.8 million from £18.8 million.

At 3:24 a.m. EST, shares in UK Mail were down 30.75 pence, or 9.3%, at 300.25 pence, underperforming the FTSE All-Share index, which was 0.5% higher. Its shares have lost 23% over the past three months.

UK Mail is unrelated to the U.K.’s state-owned postal service Royal Mail Group.

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The company said its mail business, which delivers letters, performed better during the quarter, and it picked up new clients and delivered more mail for existing customers.

Lies are not good for business