MT Top 100 operator UK Mail Group posted a 63% growth in pre-tax profit, and 8% growth in turnover, in the first six months of its financial year underlining a period of what chief executive Guy Buswell described as “very strong growth”.

Overall group turnover for the six months ending 30 September was up to £243.4m, from £225.7m in the same period a year ago, while pre-tax profit rose to £11.9m, from £7.3m.

Parcels

Its parcels business, which at £105.8m accounted for 43% of overall group turnover, increased by 21.4%, with operating profit in the unit up 91.3% to £11.1m.

Daily parcel volumes were up 25% year-on-year with UK Mail singling out its increase in home deliveries as reason for the rise.

UK Mail has also agreed with the government to relocate its Birmingham hub due to plans for High Speed Rail 2 (HS2). It said it expects to to receive planning consent for the new site in early 2014 and for it to be completed by this time next year. As a result it will also increase its investment in automated sortation for its parcels operations – expected to cost the group some £20m. Automated sortation will go live in early 2015.

Mail

Mail (which accounts for 48% of turnover) dipped slightly by 0.3% to £115.6m, but operating profit was more robust – up 10.9% to £6.3m. Buswell said he expected its mail market share to grow and that he expected that the rate of year-on-year parcels volume growth would moderate in the second half.

"We are now entering the next phase of strategic investment. With significant steps forward planned over the next two years in our capacity, customer-facing technology, I.T. infrastructure and automation, these investments will create the platform for the next chapter of growth for the group over the coming years," said Buswell.

Pallets

However turnover in its courier business fell 4.4% to £7.9m, while its pallets business was down 1.6% to £14.1m, and its operating profit contribution fell from £800,000 to £600,000.

UKPallets

UK Pallets on the way back

UK Mail blamed the dip in its UK Pallets business on temporary gaps in its network of members, which reduced imput volumes and resulted in additional delivery costs.

In August it appointed Neill & Brown to handle the HU postcode for the network, effectively replacing D&P Haulage, which, at the end of 2011, switched networks to UPN as a result of then UPN member Eurovision Logistics moving to Fortec.

Hellmann Worldwide Logistics was appointed in September to handle European pallets, replacing Dachser, as well as handling the KT, GU and TW postcodes.

UK Mail said it “remained convinced that it can be successful in a [pallets] market with good long term growth prospects”.

  • Following the publication of its half year results shares in UK Mail Group rose 6% in early trading to 623.75p.

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