Slowdown hits Royal Mail rival

The mail business is open to rivals for the first time since Charles II

One of the companies hoping to snatch market share from Royal Mail in the newly-liberated postal market has seen its shares slump almost 17%.

In a trading statement, DX Services warned that half-year operating profits were expected to fall 12%.

This was partly blamed on falling revenues at its Document Exchange unit, which delivers urgent documents between businesses such as estate agents.

A slowdown in completed home sales was behind the drop off in business.

Recently the UK's biggest chain of estate agents Countrywide said sale completions were at a 30-year low.

DX also said its parcel arm, which makes next-day deliveries of items such as contact lenses to Vision Express, also saw a drop in volume due to "general market conditions".

As a result its shares closed 58 pence lower at 287p.

Costs weigh

Meanwhile, the company's smaller mail division DX Mail - the one gearing up to take on Royal Mail - is expected to report a fall in revenues from £2.6m to £2.4m.

I am confident that the strategies in place and the actions we are taking will result in an improved performance Paul Kehoe, chief executive See the DX Services share price

However, DX chief executive Paul Kehoe was upbeat about the company's future prospects in the light of the liberalisation of the postal service which took place on 1 January this year.

"I am confident that the strategies in place and the actions we are taking will result in an improved performance in the newly liberalised market," Mr Kehoe said.

DX was one of 14 firms awarded licences by postal regulator Postcomm. Founded in 1975, it was demerged from parent company Hays in 2004.

At the start of this year, the postal market was opened up for the first time since Charles II was on the throne, allowing companies to collect, sort and deliver mail in direct rivalry with Royal Mail.