Post and parcel company UK Mail is reaping rewards from the collapse of its rival City Link, having handled record volumes of mail over Christmas. UK Mail said its network remained robust over the vital Christmas period, a time when rivals such as Yodel and Royal Mail were forced to delay deliveries.
The Slough-based firm said its expectations for full-year profits were unchanged, despite announcing the closure of its underperforming pallet business, which made up around 5% of the firm’s £509m revenue last year. The closure will cost UK Mail £1m in cash and £2m in writedowns. The firm said it hopes some of the 120 employees at its Lichfield pallet operation will be able to take up other roles within the company.
UK Mail said: “The demise of City Link is likely to have a positive impact on the overall UK parcels industry. We have taken on some volumes from ex-City Link customers but it will be some time before the longer-term outcome, on our business and on the industry as a whole, can be properly assessed.”
City Link’s collapse into bankruptcy on Christmas Eve led to the redundancy of more than 2,300 workers and the loss of livelihood for a further 1,000 self-employed and agency workers. The firm was a casualty of fierce competition in the parcel market, which is under pressure as big customers such as Amazon develop their own delivery networks.
Analysts at Investec said UK Mail had strong credentials to “win its fair share” in the £7bn parcels market. “Whilst others have stumbled [Yodel/Hermes] or fallen by the wayside [City Link], the group has had another successful trading period in its parcels business.”
UK Mail shares gained 6% on a day of thin trading to reach 470p.
