PARCELS group Business Post yesterday issued its second profits warning in three months.

Investors were left reeling after Business Post announced that it was not handling as many parcels as last year and its annual profits were likely to fall 20 per cent short of market hopes.

Volumes at its Express unit, which makes overnight deliveries between businesses, were up eight per cent at the start of the year, but have worsened since then to be 3.5 per cent below levels seen in September last year.

Business Post, whose UK Mail operation is a rival to Royal Mail, raised prices and made a number of job cuts to protect its results - but the benefits of these initiatives will only be seen in results relating to the period between last month and March.

Pre-tax profits before exceptional items fell to £6.2m during the six months to September 30 from £8.6m at the same stage of last year. Revenues from Parcel Services, which represents three-quarters of all business and includes the Express unit, increased 8.6 per cent to £97.7m.

ING analyst Andrew Beh said the two warnings since September meant that Business Post was set to produce profits 60 per cent below expectations at the start of the year.

He expects a significantly lower figure than the £20.5m profits achieved last year.