UK Mail delivers solid revenue growth

Parcel delivery and logistics services group UK Mail saw sales and profits broadly match consensus estimates in the year ended March 31st and said that trading in the current year has begun in line with its expectations.

Reported group revenue grew 8.4% from £395.8m to £429m during the period, helped by strong growth in Mail, up 14.5%. Parcel revenues grew 3.2%. The market consensus was looking for a figure of £425.2m.

The group said that the strength in Mail growth reflects the impact of the Royal Mail price rise on May 6th 2011 which increased prices by 15% on an annualised basis.

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"These results show UK Mail's resilience during a year of tough trading conditions, in markets that are undergoing fundamental change," said Chief Executive Officer Guy Buswell.

"We fully expect the economic backdrop to remain tough in 2012 and the pricing environment to stay highly competitive. We are planning accordingly, with tight control of our costs continuing to be a key focus," he said.

Profit before tax and exceptional items fell from £16.1m to £15.1m, slightly under the £15.03m estimate, as a result of a fall in margins and the impact of one less working day, the group said. Exceptional items totalled £2.2m (prior year: nil) relating to restructuring costs.

The total dividend was maintained at 18.2p per share, in line with estimates.

"We expect a continued decline in underlying mail volumes in the UK market, exacerbated by the price increases imposed by Royal Mail. We will maintain our focus on winning additional mail volumes from new and existing customers and driving the growth opportunities presented by our new product developments," Buswell added.

Shares were down 0.84% at 237.5p in early trading on Tuesday.

BC