Royal Mail rival issues profit warning
The London-based company, which was demerged from Hays in November 2004, said it expected profits for the six months to the end of December 2005 to be 12% lower than in the same period in the prior year. DX services said that while its document exchange segment - from which the company generates important business from law firms, financial services firms and retailers - has benefited from the price increase introduced in April 2005, the firm has felt the effects of the general slowdown in the property market and operational changes in the financial services sector. As a result, interim revenue from the segment is expected to be around GBP41 million in the period, down from GBP42.9 million in 2004 Furthermore, revenue from the company's large parcels division is expected to be around GBP21 million for the six months to 31 December 2005, down from GBP21.3 million recorded in 2004. Although the additional revenue expected from new customers was achieved, it was offset by an overall reduction in volumes due to general market conditions. DX Services also revealed it would take a charge of GBP1 million to cover pay-offs to its former chief executive, Peter Brougham, and its finance director, Michael John Saunders, who both quit the business in the past six months. "I am naturally disappointed...to report that profits will be worse than had previously been anticipated," said newly-appointed chief executive Paul Kehoe, "However, I am confident that the strategies in place and the actions we are taking will result in an improved performance in the new liberalized market." Mr Kehoe went on to state that the document-exchange network would be the backbone of the mail service, adding that DX Services intended to go ahead with plans to issue its own stamps to customers.