UK Mail posts flat H1 profits but says peak trading ahead

Parcel courier UK Mail posted flat first-half profits after a tough second quarter, but hiked its dividend and said the busy Christmas period was yet to come.

UK Mail, which competes with newly privatised Royal Mail as well as the likes of TNT Post and DHL, said operating profit before one-off items in the year to 30 September rose £100,000 to £11.4m on flat revenues of £241.4m.

Group pre-tax profit was also flat at £11.4m, though the board increased the interim dividend by 2.8% to 7.3p per share.

The company's parcel division had a good first quarter for revenue but the second quarter was tougher, with volumes below expectations in the latter weeks of the period, which UK Mail blamed on weakness in the retail market.

The group said its mail business outperformed the market in volume terms and its smaller courier business remained solid, whilst its pallet operation performed worse than last year.

Chief executive Guy Buswell said the group was now in a period of significant investment, including construction of a fully-automated distribution centre.

"Trading in the initial weeks of the second half, and overall trends within our individual businesses, have been as anticipated, with our peak trading weeks still to come. Our expectations for the full year remain unchanged," Buswell said.

Shares rose 8.25p or 2.1% to 405p at 12:17 in London.