UK Mail share price hurt by parcels pickle

THE wrong type of parcel sparked chaos at a new distribution centre causing owner UK Mail to issue a profit warning.

Shares in the courier firm fell 13.21pc, or 70p, to 460p after it said annual profits would be £10m£ 12m, s hort of t he £ 20.4m expected. It had invested £20m in a new plant at Ryton, near Coventry, designed to handle extra business from rival City Link which collapsed over Christmas.

But its new systems were built to handle smaller items because executives did not realise City Link’s former customers needed to send large items.

The hub could not handle the items which had to be processed manually, hiking costs and causing customers to quit.

The firm said parcel volumes rose 4pc in the last four months against the same time last year, compared with 12pc growth between January and March.

UK Mail has launched a review to sort out the problems, which could mean higher prices for bulkier parcels. But it does not expect to fully resolve the problem this financial year and says the issues may last into next year.

However chief executive Guy Buswell was upbeat about longer term prospects, saying new cus- tomers were keen to sign up. He said: ‘This near-term setback to our financial performance is clearly very disappointing.

‘We’re taking decisive action to address these issues and we’re confident they can be reversed.’

The home delivery market has been turned on its head with the boom in online shopping.

Firms like Amazon expect to pay less for offering firms more business but the industry has been struggling to cope with demand.

City Link was squeezed out while Whistl, formerly TNT, pulled out after losing its battle with former state-owned operator Royal Mail to deliver to people’s homes.