UK Mail Group reports disappointing results for 2016 following difficulties with facility move
UK Mail Group's pre-tax profit was halved in the 2016 financial year, following what the company described as a "challenging" year, after difficulties arising out of its move to a new, automated facility in Ryton in July 2015.
The figures
Profit before tax was £10.7m, compared with £21m in 2015. This was in line with the group's previous guidance.
Group revenue was £481m, down 0.8 per cent from £485.1m the year before.
The firm reported net exceptional income of £3.7m which reflected compensation received from HS2 for its hub relocation.
The company declared a final dividend of 10.9p per share, down from 14.5p in 2015, resulting in a total dividend for the year of 16.4p.
Why it's interesting
UK Mail had previously predicted that its move to a new, automated facility would impact on results – but its performance was worse than expected. The company admitted that, while the move is still expected to deliver long term opportunities and will place the group "among the most efficient and competitive operators in our market", the year has been "very disappointing".
What UK Mail said
Peter Kane, chairman of UK Mail, said: "Last year was a challenging one but we have made good progress in implementing a detailed plan to address the issues we faced in transitioning to our new automated hub. The hub is now operating very well and achieving good throughput levels, having recently processed its 30 millionth parcel, with consistently high service levels in both parcels and mail in recent months.
"The strategic rationale for the investments we have made remains compelling, and sets us up well for the next stage of profitable growth. The benefits are expected to start showing through in the second half of the current year, as a result of which we continue to expect performance to be more second half weighted than usual."
In short
UK Mail's facility changes have yet to deliver for the group.