Royal Mail profits almost double

[TrueBlueTerrier]

http://news.bbc.co.uk/1/hi/business/8049808.stm" onclick="window.open(this.href);return false;

Royal Mail has seen its annual profits almost double, as all four parts of the business went into the black for the first time in 20 years.

The state-owned firm made a group-wide operating profit of £321m in the year to 31 March, up from £162m a year ago.

This came after its main letter delivery business and its Post Office arm returned to profitability.

The government is continuing plans to part-privatise the Royal Mail, saying outside funds are vital for its future.

The government says one key reason for the need of outside investment is the extent of Royal Mail's pension deficit.

According to Royal Mail's latest figures, this has more than doubled over the past year to £6.8bn.

It also warned that mail volumes declined 5.5% during the 12 months, and predicts they will fall by a further 10% in the current financial year due to the recession and the continuing growth of electronic communications such as e-mail.

Labour rebels

The government wants to sell off a 30% stake in Royal Mail, but ahead of a planned Commons vote on the bill next month, it is having difficulty winning over almost 150 Labour rebels.

One of the bidders for a stake in Royal Mail is likely to be the privatised Dutch postal group TNT.

Unions at the Royal Mail are also strongly opposed to the part-privatisation plans.

Group-wider annual revenues at Royal Mail were up almost 2% to £9.6bn.

Royal Mail chief executive Adam Crozier said the firm had made a "huge effort" to modernise and improve its efficiency.

Annual profits at Royal Mail's letter delivery unit totalled £58m, compared with a loss of £3m for the year before.

The Post Office business made a profit of £41m, compared with a £34m loss a year earlier.

"Our people have delivered strong financial results and high quality customer service across all our businesses in the face of extremely challenging trading conditions," said Mr Crozier.

The Royal Mail did not release any pre-tax profit figures, which are generally considered to be a more accurate guide to a firm's underlying financial performance.

[TrueBlueTerrier]

Our people have delivered strong financial results and high quality customer service across all our businesses in the face of extremely challenging trading conditions

and you decided to reward us for the hard work by FREEZING OUR PAY

[k979aaa]

Our people have delivered strong financial results and high quality customer service across all our businesses in the face of extremely challenging trading conditions

and you decided to reward us for the hard work by FREEZING OUR PAY

This is the thanks we get from :cfo this guy makes me almost as sick as :mfo

[martin]

Funny how you make such a profit when mail volumes are down.I smell a rat. :cfo :mfo

[treadhead]

Heard this on the News at lunch time, words could not describe the anger I felt coming on top of No rise for us this year and MP's making free with our cash.
If you wrote this into the plot of a soap no one would believe it.

[tiredwalker]

This basically sums RM up at the moment, S**t on everyone to get the job done and still make out its giving a good service, therfore justifing themselves.

[F0zziebear]

Expecting a pay rise when a company makes a profit does not make any sense. A reasonable bonus as a proportion of the profits does make sense and depending on what your national pay agreement says then you should get something extra.

I wrote about mail vgolumes declining a few years ago shortly after joining and my worries are becoming clear. As stated numerous times most of RM's volume increases were due to the volumes from the banking sector offering cheap loans and mortgages and the public sector which has grown massively under Labour. ALong with the increase in packets under the banner of fulfillment the volume of mail remained reasonably static over the last ten years. However, now one can see how fragile this was and that the underlying trend in volumes was going down. Banks have contracted rapidly and I expect this to increase and the public sector will be squeezed in coming years (probably under Conservative rule) as they need to claw back the huge public deficit.

As for costs, well its true that many managerial heads have gone (which is where the true financial benefits come from) and also frontline staff retrechment. It is also true that fewer people are probably doing a larger proportion of the work. We should also recognise that plenty of proprty has been sold, and mail centres amalgamated. Once all of these cost savings come through then the onset of further declines in revenue from mail will begin to truly bite by 2011/12 at the latest.

RM needs to find a way of exciting the market again. Whilst iMail is not in my opinion a strategic winner, there is nothing wrong in copying them just to get some positive PR and engage with people who would not normally send mail. Personally I would run it at a loss to generate volume and under-cut the competition. If it works for Microsoft and TESCO then why not RM. RM also need to invest heavily in R&D (Research & Development). They have cut out huge swathes of their innovation and research departments, but in the right hands this is where the next great idea will come from. Google give their employees 20% of their time to investigate new ideas. I think something along these lines (no not you posties or other frontline staff) will bring about some creative ideas. I may even have some myself, but if someone puts the right incentive my way then we can talk.

I also add caution to this slightly upbeat paragraph above. BT was privatised some time ago and they have gone from one strategy to another and recently come un-stuck. BT transformed it's core business and entered into new arenas. Whilst I am not saying RM needs to do this necessarily it certainly needs to broaden it's horizons.

I should also point out that if anyone thinks that packets/e-fulfillment is going to recuse RM then think again. By the time RM is setup to properly handle increased packets and provide value-add services much of this growth will fall into decline.

1. DVD/CD's Blu-ray etc. is a short-term increase. This media under increased bandwidth speeds will turn into e-media and not physical media. You download a tune/album or DVD it streams on your computer, can connect to your TV and probably be transported into your car (all through synchronisation), thus removing much of the need for physical media.

Maybe I am being unduly negative. At least RM's new look website is a step in the right direction, but when was the last time you got excited about a new RM product?

p.s. New Group Strategy Director in place, where's he from? BT hmmmm

[borders]

we were told yesterday that we will receive 400 pounds from the Collegue Share Scheme and this will be in our paypackets at the end of may.

[borders]

all understood Fozzie, the basic model of the RM is a simple one , collect and deliver items of mail. the opening up of this market for competition ,which has really meant more companies chasing an ever shrinking slice of the cake .is this surely a good idea ?. what are the real motives by people like Mandelson/ EU in doing this ? i think in the last few days and months we have seen the real reason why they do this. they belong to a small club that makes the rules that enables them to enrich themselves whilst trying to hide the fact. why not allow the RM to do what it does- deliver and collect mail. we accept times are changing and we need a more modern and scaled down version of the RM , let the unions and RM sit round the table and come to some plan as to how we can move sensibly forward. at the moment RM are intent on bringing changes by Executive action and with no consultion with the workforce for example Pegasus.

[johnsouthwales]

how were the profits made and in which areas? they won't say that in the papers. apparently, it's royal mail profit as a whole, postoffice, royalmail, parcelforce

nothing to do with mail office closure savings, post office closures, using cars for deliveries?

[BELIAL]

Apparently all areas in profit, and old Fozzie bless his soul is drowning in a sea of confusion.£377 million profit but the problem is this

[F0zziebear]

Now now. If I am correct one has the following:

1. Basic salary which one gets in exchange for doing what is committed to in one's contract.
2. Bonus: Certain targets are agreed upon and if one meets those targets then one gets a bonus.
2a. Depending on how the renumeration for the target is set one may get more of a bonus the larger the profit made, or over-achievement of the target.

I do not know the details of the pay agreement negotiated on your behalf by the CWU or CMA depending on your role. To complain that you are not seeing a reasonable chunk of the dough when the company that employs you makes a profit is dependent on your contract. I do not remember any posties offering to give back any of their salary when RM made a loss.

Now some may say that I am some neo-liberal free-marketeer, far from the truth. Take for example an estate agent. Usually on a very low basic salary, yet gets a proportion of every sale made. Some can ear large amounts of money if they can sell plenty of properties. Those same people in a recession wish they had a much higher stable income. It is swings and roundabouts. During a recession most of your have a guaranteed job with a large part of your bonus pretty much in the bag before the year begins.

It would be helpful if someone could go into the pay agreement and publish the breakdown of your bonus structure. I think it would help this debate.

Onkle F0zz

[rockytony67]

Off the top of my head Fozzie, I don't believe we have an agreed bonus structure, Collegue share is based on the company's financial position and has not been agreed to by the union, and the other one was 50/50 which has now ended and was based on cash savings in offices.

You still have the ex IWM Xmas bonus that has been £100 since 1988 and the PBS bonus(for offices that get it) that has been frozen since units went into SDD.

[andy2007]

Now now. If I am correct one has the following:

1. Basic salary which one gets in exchange for doing what is committed to in one's contract.
2. Bonus: Certain targets are agreed upon and if one meets those targets then one gets a bonus.
2a. Depending on how the renumeration for the target is set one may get more of a bonus the larger the profit made, or over-achievement of the target.

I do not know the details of the pay agreement negotiated on your behalf by the CWU or CMA depending on your role. To complain that you are not seeing a reasonable chunk of the dough when the company that employs you makes a profit is dependent on your contract. I do not remember any posties offering to give back any of their salary when RM made a loss.
We were told that we couldn't have a pay rise, because RM couldn't afford it. We now know that not only can they AFFORD it (surprise, surprise. They lied again!!!!!). They have made excellent profits. Hence our anger at suffering a pay freeze. Which as I'm sure you're aware: amounts to a pay cut! Prices go up every year (inflation), so unless our wages do the same, we end up with less money than in previous years.

We need to pay our bills, just like everyone else. Obviously, we have been getting below inflaion pay rises for a while now. But we still take home a good wage, for what we do. But at this rate: in a few years, we'll be as badly paid as our so-called competitors. Who don't actually deliver the mail, they're paid to deliver (they sub-contract to us). As we provide the service we're paid to, while they are totally incapable of doing. We should get paid properly for that.

Now some may say that I am some neo-liberal free-marketeer, far from the truth. Take for example an estate agent. Usually on a very low basic salary, yet gets a proportion of every sale made. Some can ear large amounts of money if they can sell plenty of properties. Those same people in a recession wish they had a much higher stable income. It is swings and roundabouts. During a recession most of your have a guaranteed job with a large part of your bonus pretty much in the bag before the year begins.

It would be helpful if someone could go into the pay agreement and publish the breakdown of your bonus structure. I think it would help this debate.
I have little interest in the Bonus structure, as I'm far more concerned with the quality of the service we provide, than how much I can gain financially. All I'm interested in, is having enough money to pay the bills. And having some disparity between what we earn for providing the service we're paid to provide. And those leeches, who take away our Customers, take their money, then subcontract all the hard work to us, at well below cost! Is that REALLY too much to ask?
Onkle F0zz

[andy2007]

Off the top of my head Fozzie, I don't believe we have an agreed bonus structure, Collegue share is based on the company's financial position and has not been agreed to by the union, and the other one was 50/50 which has now ended and was based on cash savings in offices.

You still have the ex IWM Xmas bonus that has been £100 since 1988 and the PBS bonus(for offices that get it) that has been frozen since units went into SDD.

We never got our PBS money anyway, because one of the Managers was "cooking the books", to get a bigger bonus for himself, and to make us appear to be the best RDC in the Country. Obviously, IB found out eventually, and he was prosecuted. But they never gave us a penny of the bonuses that we'd been earning for several years, without knowing it!

Their excuse?
They didn't know for certain, whether we'd earned it or not.

But the important point is: The Croziers, Leightons, etc., of this world. Need to get it through their skulls, that cuting costs at the expense of quality of service, is NOT the way to do things. Has the Credit Crunch taught them nothing?!?!?

If you have a system (like the one for Estate Agents, for example), where you get a very low wage, but the prospect of big bonuses: You enourage people to cut corners, for the sake of profits.

If on the other hand: you instill a feeling of pride, in the quality of your service. Give a decent (not to be confused with an unduly large) wage, and show genuine gratitude, to those who make an exceptional contribution to the quality of service. Then your Employees, aren't likley to cut corners, are they?
Then people are more likley to come to your Company, and give you their costom, because they will TRUST you, to do a good job! The more Customers, the more turnover. The bigger your turnover, the better your potential for profits.