LONDON: UK Mail is blaming the wrong kind of parcels for its latest profits warning: specifically too many odd-shaped packages. Its shares fell more than 14 per cent.
The rival to Royal Mail has moved its main sorting operation from Birmingham to a new fully-automated hub in Ryton, near Coventry. But the company has admitted that a fifth of parcels do not fit the new system.
A greater than anticipated proportion of current parcel volumes is incompatible with UK Mail’s new automated sortation equipment, resulting in additional operating costs and therefore a delay to the full benefits expected from automation,” the company said.
Many of the odd-shaped parcels are understood to have been those inherited from City Link customers, after that parcel business went bust at the start of the year. UK Mail also blamed too many City Link customers for a profits warning in April.
UK Mail has also seen greater churn among its customer base, due to the disruption caused by the relocation.
The delivery company is now saying that profits will be in the region of £10m to £12m this year, compared with expectations of £20m. The shares fell 75p to 455p.
The impact of the problem is likely to spread into 2016 as well, UK Mail said.
