SHARES in UK Mail dropped more than nine per cent yesterday after the delivery firm warned on its full-year profits, prompting Investec to cut its earnings and dividend forecasts and its target price to 400p from 420p.
“Whilst we were able to manage our operations such that over 99 per cent of our Christmas parcel deliveries were delivered before Christmas, the weather meant that we incurred additional cost in our network to hold and deliver consignments,” said UK Mail.
In a note, broker Investec said: “Whilst many of the issues faced in the third-quarter are one-off in nature, we have chosen to take a slightly more cautious approach to our expectations for the following financial years as well.”
The broker cuts its earnings forecasts by up to 5.3 per cent for the years 2011-13, and reduces its dividend per share estimates by up to 4.7 per cent for the same period.
Investec, however, repeats its “buy” rating, saying that: “UK Mail has a strong UK market position and is managed well operationally,” and “it remains in a strong financial position”. The shares closed 4.27 per cent down at 317p.
City A.M. Reporter