DX Services delivers bad news on profits

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The Independent Online

The company, which was demerged from Hays in November 2004, said it expected profits for the six months to the end of December to be 12 per cent lower than in the same period the previous year. Shares in the company fell 58p, or 11 per cent, to 287p.

DX Services blamed the profits slump on a decline in revenues from its document-exchange and parcels businesses which generate a lot of their business from lawyers, financial services firms and retailers.

Revenues from the document exchange service, which handles 1 million items a night through a network of 4,500 boxes, would be down by about 5 per cent to £41m for the period. The service is widely used by solicitors and estate agents to send documentation relating to house purchases.

DX Services said revenues were also down in its second-biggest division, parcels, due to "general market conditions", and warned there was little prospect of a pick up, either in this division or document exchange in the short term.

DX Services also revealed it would take a charge of £1m 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.

DX Service's profits warning follows similar gloomy news from the rival private mail operator Business Post, which ousted its chief executive Paul Carvell last year after a series of profits warnings.

The new chief executive of DX Services, Paul Kehoe, who took up the post last November, said he was disappointed that his first announcement was a profits warning but maintained that the "broad strategy" of the group was correct.

DX Services has recently begun operating a mail service for small businesses in competition with Royal Mail which generates revenues at an annualised rate of £5m.

Mr Kehoe said 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.