UK Mail’s new post centre near Coventry has been unable to take parcels of the wrong shape, has been in chaos ahead of the key Black Friday- Christmas online shopping and delivery splurge and has been responsible for two profit warnings that have prompted a 45 per cent crash in the shares, reports The Times.
Guy Buswell, UK Mail’s chief executive for the past ten years, has been relieved of his duties with immediate effect by Peter Kane, the part-time chairman, who, without a replacement to hand, has taken over for the time being as executive chairman.
A not-disinterested party, as founder of the company that used to be called Business Post, Mr Kane heads the family that owns 55 per cent of UK Mail shares. He, his children and brother have lost — in paper terms — more than £75 million this year as it emerged that the new hub was not delivering.
Mr Buswell, a 26-year veteran of the company, will walk away with a payoff of at least £375,000. He has shares in the company worth nearly £900,000 after the recent dive in the price.
Mr Buswell has left less than a week after announcing a second big profit warning in three months and a cut in the dividend on the back of collapsing profit margins.
UK Mail is one of the country’s largest parcels delivery businesses, handling customer post from big companies including O2 and TalkTalk. Its present woes go back to the government’s decision three years ago to run the HS2 high-speed rail line through the company’s then main depot at Washwood Heath, near Birmingham.
UK Mail decided to up sticks to Ryton, the site of the old Peugeot car factory outside Coventry. The transition to a new hub, opened this year, has not been a success, however, and costs spiralled well in excess of the £35 million it received from HS2 Ltd for the land and in compensation. The company had to open a secondary hub near by to cope with the oddly shaped parcels that the sorting machines in Ryton could not handle.
The cost of that, as well as the extra manpower, resulted in UK Mail’s interim pre-tax profits slumping from £12 million to £2.2 million and the half-time dividend being cut by a quarter to 5.5p.
With profits expected to halve to £10.5 million in 2015-16, the latest warning indicated that the issues would continue to weigh on the company for some time. Investec, the company’s stock broker, cut its forecasts for 2016-17 from £18 million to £15 million.
The news of the crisis at the top of UK Mail — Gary Moore, its operations director, left last month — further unsettled investors and the shares dived another 4 per cent, closing 13½p down at a three-year low of 306½p.