Shares in parcels group Business Post lost around a quarter of their value yesterday after the company - which operates a huge hub operation in Birmingham - warned its annual profits would be " substantially" lower than last year.
The country's fourth largest mail operator said it expected pretax profit for the year to March 2006 to be around ten per cent lower than the previous year ' s figure of £20 million.
Business Post also said it had been forced to make a £3.2 million provision to cover outstanding payments from franchisees, relating to previous years.
The group has a parcel network of 59 depots, 34 of which are franchised.
More than 40 jobs have been cut recently in support centres, including half a dozen in Birmingham.
However, further losses have been ruled out.
Shares fell 24 per cent to 493p following the warning.
The group, whose UK Mail arm is a rival to Royal Mail, said deteriorating economic conditions had led to a sharp decline in trading at Express, its core business-to-business parcel delivery arm which accounts for around 50 per cent of turnover.
"The reduced expectations of profit from normal trading reflect a sharp decline in the rate of growth of volume in Express in response to deteriorating economic conditions," the group told shareholders.
"Whilst daily volumes at the start of the year were eight per cent above those a year earlier, market conditions have progressively deteriorated to the point where daily volumes in August were below those last year.
"The rate of decline appears to have showed in September, and Express revenue for the first half is now expected to be above three per cent last year."
In contrast, UK Mail - the first private company to break the Royal Mail's 400-year monopoly on postal deliveries - continued to make "excellent progress", with profits ahead of expectations and revenues for the five months to August 31 coming in at £11.5 million.
The operation, which made a profit in its first year, collects post from customers and processes it through its network of 64 sites - the largest of which is in Birmingham - before passing it to Royal Mail for delivery by local postmen.
Slough-based Business Post set up the service after regulator Postcomm gave companies the right to enter the UK market in 2003.
" Revenue for the five months to August 31 totalled £11.5 million and profit is tracking ahead of expectations," the group added.
"UK Mail remains the leading alternative to Royal Mail in the business mail market.
" It continues to make important client wins, is trialling with some very substantial organisations, and awaits the result of several significant new business pitches.
"Its unsorted mail service, which started in Swindon in April, has made a good start and will shortly operate out of four depots."
Numis said it cut its rating on Business Post to "sell" from "hold" and its target to 427 pence from 679p. Shares closed down 176p at 474p.