UK Mail saw its profit tumble by more than 80% in the six months ending 30 September 2015, after its relocation to a new hub and “teething issues” with the facility’s technology.
The group’s pre-tax profit for the period was £2.2m, compared to £12m in 2014 - a fall of 81%.
In its interim report for the six month period, UK Mail said the effects of the move to the new Coventry hub, after it was ousted from its previous Birmingham site by HS2, had been “more significant than anticipated” in the near-term and that the latest results were “disappointing”.
The group saw increased costs when its automated parcel sortation system at its new, purpose-built site proved unable to handle every parcel size required.
While UK Mail said it remains confident it will restore the profitability of its parcels operation within a 12 month period, the statement added that “it will take longer than originally anticipated to resolve the issues”.
Chief executive Guy Buswell said: “As we advised in August, it has become clear that the near-term challenges associated with the transition have been more significant than first anticipated.
"Our expectations for the current year therefore remain in line with previous guidance. However, due to the timescales required to fully resolve the challenges, our expectations for the next financial year have softened slightly.”
He added: "Whilst this is disappointing, the strategic rationale for the transformation we are undertaking is as compelling as ever, and we are confident both of our ability to restore our parcels business to previous levels of profitability and to build from there.”
The group is set to receive £10.3m compensation from HS2 in December of this year, and saw a 4.5% revenue increase, from £227.5m in 2014 to £237.6m.
