UK Mail plans to increase the level automation in its parcels business to some 80 per cent following the move to the new Ryton hub.
In its annual results, the operator said: “We are taking action to amend the profile of the consignments we handle to make the best use of the automated parcel sorter. There will however be an element of the consignments that we will continue to handle for customers that will not be compatible with automated sortation, normally on account of their size. The ability to handle such consignments is a key differentiator for us compared to those competitors who are 100 per cent automated.”
Operating profit in the parcels business was down 4.5 per cent to £21.4m for the year to 31st March, while revenue was up 3.7 per cent to £228.1m.
The company closed its pallets business in March. The business made a loss after tax of £10.8m last year. The group said revenue and profitability declining in an increasingly competitive market.
The Mail division saw small falls in both sales and profits. Revenue was down 1.9 per cent to £240.5m while operating profit was down 1.7 per cent to £12.5m.
CEO Guy Buswell said: “After a strong period of growth, with the volume of parcels handled within our business doubling over the past five years, UK Mail is in the midst of a period of major investment and transition at a time when our markets are undergoing significant change. All this has created some inevitable challenges but also significant longer-term opportunities.
“Our investment in a newly constructed, fully automated hub at Ryton near Coventry is the largest strategic development in UK Mail’s history, bringing extra capacity and reducing operating costs across our business and setting us up very well for our next stage of profitable growth.
“The first half of the new financial year will be challenging as we reposition our parcels business and manage the full transition to the new hub. This, together with the implementation and roll-out of the new automation, will result in performance for the year being more weighted to the second half than usual.”
In total, group operating profit was down 4.7 per cent to £21 million, while revenue was up slightly at £485.1m