UK Mail Group saw turnover and pre-tax profit climb last year thanks to increased volumes, winning new business and retaining existing customers in its parcel and mail divisions.
Average daily volumes in its parcels division grew 19% last year, its results for the year ended 31 March 2014 showed, which it said enabled the business to better spread the its fixed costs and increase its operating margin.
Despite this, the group expects growth in parcel volumes to slow this year due to constraints in its capacity. It is however planning to expand eight of its 50 sites in the next 12 months and said three were expanded last year.
The firm also revealed that the DfT will pay £9.5m for its Heartlands hub, which will be relocated to make way for the government’s HS2 project. The new site is expected to open at Prologis Park in Ryton in spring 2015.
Turnover in the division grew 16.2% to £219.9m, up from £189.3m the year before, remaining the second largest contributor to group turnover.
The group also saw an increase in turnover in its mail business, up 1.5% on the previous year to £245.3m. Mail volumes increased by 2%, generated by new customer wins and additional mail from existing clients.
It admitted that its pallet network, UK Pallets, experienced temporary gaps in the coverage, resulting in a reduction of volumes during the year and additional delivery costs. It has however recruited new members, but claimed it is “taking time for the new members to achieve the sales volumes that would be expected from established members”.
The company said it has made changes to its pallet network model and now has “good long-term growth prospects”, despite seeing turnover in the division drop by 3.2% to £27.1m (2013: £28m).
Its courier division also saw a 1.9% decline in turnover to £16.2m, and hopes to focus on its national contracts.
Chief executive Guy Buswell said: “These results reflect an excellent year for UK Mail, with increased revenues and strong margin progression. We have also achieved profitable growth across all areas of the business. Such a robust performance shows that we have accomplished almost all that we set out to achieve through the programme of investment and change over recent years."
Group financial highlights
- Group turnover increased 7% to £508.5m (2013:£475.4m).
- Group pre-tax profit rose 28.2% to £22.8m (2013: £17.8m).
- Group pre-tax profit margin increased to 4.4% from 3.7% last year.
