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Express ride to trouble
Page 22
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UK express delivery operator Business Post released a trading update revealing that unexpected cost increases caused annual pre-tax profits to fall below the company's expectations. Strong growth was experienced in the International, courier and B2C parcel delivery segments, but challenging market conditions dampened figures overall.
Datamonitor believes that continued growth in the company's non-core divisions will undoubtedly be required in the future in order to reduce the company's main problem, namely the over-reliance on its express division. This area continues to contribute over 50% of company revenue, though acquisitions and organic growth have helped reduce this from 80% in 2002.
The company will certainly have the opportunity to tackle this further with the deregulation of the postal market looming. However, although sustained growth is possible, it is DatamonitorS view that Business Post will have to work hard to ensure that this profit warning does not do its reputation too much harm.