UK Mail posts profit after four-year wait

[POSTMAN]

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UK Mail, the small private rival to Royal Mail, has shaken off the contraction in the British postal market to increase its dividend for the first time in four years.

The company said that its pre-tax profits for the year to the end of March came in 42 per cent higher at £12.7 million.

These were flattered by the previous year’s bigger finance costs and tax bills, but even at the operating level profits came in 3.5 per cent higher at £17.9 milion on flat revenues of £385 million.

The final dividend is being increased by 1p to make a total for the year of 18.2p, 6 per cent higher than last year.

UK Mail was in the vanguard of the liberalisation of the postal market in the last decade, snapping up bulk senders of letters such as O2, Lloyds Bank, Halifax and E.On.

The transactional mail business has been under pressure as such businesses have sent out fewer statements and used online services instead. UK Mail said that the shortfall had been replaced by businesses sending out promotional post to their clients.

Profits in the company’s postal business — its biggest operation ahead of its parcels and courier businesses — increased by 5 per cent to £12.2 million on revenues up by a similar amount at £173 million.

UK Mail has thrived from taking business away from Royal Mail but Guy Buswell, its chief executive, has high hopes for a new relationship with the state post group in the packets market.

UK Mail is signing up new bulk mailers of packets, a £1.5 billion-a-year market headed by Amazon, in a deal which will see it use Royal Mail postmen for the last-mile delivery.

Royal Mail, which will publish its annual results tomorrow, has agreed to the arrangement because it means that the market share it has lost to companies such as DHL and the Home Delivery Network, who perform their own deliveries, will come back into its network via UK Mail.

“We start taking packets from next week and it’s a great opportunity for us in a business which has a strong platform of growth,” Mr Buswell said.

[DGP1]

in a deal which will see it use Royal Mail postmen for the last-mile delivery.

Again, we're providing their profits without them doing the work, just tell them to FO and deliver their own packets.


ps. And Citylink can follow them

[Patrick Clifton]

Royal Mail's results tomorrow!