UK Mail remains confident about its long-term prospects, and has now got a handle on problems at its new sortation hub that are set to have a significant impact on its full year earnings.  

In a trading statement released today, the group said its overall group performance was “in line with [the] revised expectations” outlined in its latest figures for the year ending 31 March 2015.

The operator was forced to move to its new hub in Coventry because of the advance of HS2 through its former Birmingham site, and UK Mail said it hoped the new automated hub would sort 80% of its parcel volumes automatically.

However the technology proved incompatible with the operation, leading to further, unanticipated costs.

At the time, UK Mail said: “The move has caused a greater level of customer churn and loss of volume than anticipated, with an associated adverse impact on parcels revenue mix.

“In addition, a greater than anticipated proportion of current parcels volumes is incompatible with UK Mail's new automated sortation equipment, resulting in additional operating costs and therefore a delay to the full benefits expected from automation.”

In today’s statement, chief executive Guy Buswell said: "We are focused on executing the plan we have put in place to address the recent challenges associated with our Parcels business.

"We remain confident in our medium and long term prospects and in the operational benefits that our new fully-automated hub will bring, with a number of significant new customers keen to use our services as a result of this investment."

The statement also said that both its parcel and mail volumes for the first half of the year, until September 30, had seen an 8% increase on the same period last year.

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