Royal Mail will only deliver with sell-off

[TrueBlueTerrier]

http://www.telegraph.co.uk/news/uknews/ ... l-off.html" onclick="window.open(this.href);return false;

A glance Royal Mail's half-year results on Thursday and you would never have thought this was a company ravaged by strikes, rising competition and ever-falling revenues.

Group operating profit rose by £7m to £184m while revenues fell £73m to £4.6bn. The recent strikes should be seen in the context of how that sort of result was achieved – a £170m cut in wage costs, meaning the company was 5,000 people lighter year on year. Add to that the impact of more modern working practices resulting from the £1.3bn invested in new kit and Adam Crozier, the Royal Mail chief executive, can produce some impressive looking results.

But it can't go on, even with the most impressive presentation. There is a limit to what change can achieve when faced with relentlessly bad fundamentals. Traditional mail volumes fell 8pc as recession and electronic messaging took their toll.

The group's cash position would give the chief executive of any commercial retailer or service company palpitations. There was a cash outflow of £434m to pay for redundancies and investment while competition will only grow.

Modernising the business and stripping out costs are fine but in the medium term more radical change is needed. We were approaching that with the results of the Hooper review last December (presciently called Modernise or decline) but those recommendations were ducked. They need reviving. The biggest worry is the gargantuan £10bn pension deficit. A long-term solution to that could be linked to a part privatisation of the company. This would also give it access to capital markets so the business can be refinanced commercially. At the moment its only source of capital is the Government which, as we saw in the pre-Budget report, isn't awash with cash at the moment.

The Government wobbled over setting the Royal Mail at least partially free but a new administration would be wise to reopen the file now that capital markets are growing in confidence. There is a profitable business within the Royal Mail Group capable of standing on its own two feet which would benefit taxpayers and customers alike. But until the right financial and regulatory regime is put in place all that potential will remain undelivered.

[Pat Ostman]

More garbage from the Tory paper. Royal Mail getting taken over would only make a bigger profit because they will charge the customers more!

Utility companies are only different by a few quid a year. Train's are extortionate and are always late. BT is no better. Exactly what has privatisation brought except capitalism?

[steven100]

I'm afraid people have to realise the RM are finished, starting planning for the inevitable, look at new careers and look at other jobs. RM is finished ......end off.

[dropbag_clone]

RM is finished ......end off.

Should that not be 'end of' ?

[DGP1]

RM is finished ......end off.

Should that not be 'end of' ?

At least I'm not the only spelling/grammar nazi

[dvbuk55]

RM is finished ......end off.

Should that not be 'end of' ?

At least I'm not the only spelling/grammar nazi

Yawohl - ve haf vays for makink you spell

[Big Daz]

Re financing of RM will occur when we have finished our repayments to the government for the loan and the government have taken on the defict in the pension fund.

This will provide over half a BILLION pounds a year extra in RM Group bank account.

Of course that dosent fit in with the daily torygraph view point.


The torygraph has obvisouly not read the Hooper report properly, as a strategic partner owning a minority of RM group was not just about money, it was about tying them in the success of RM group.

[ziko]

So when RM is part privatised say for arguements sake by 25% and this buyer (i.e TNT, DHL etc) invests will TNT or whom ever be paying for 25% of the £10 Billion pension defecit ? So a private investor during a global recession will waste £2.5 Billion before they even start im not convinced mandelshrew?

[fmrPOSTIE]

Yet more crap. If the reporter had done their research properly they would have known that even if RM was privatised the private partner wouldnt have anything to do with the pension fund! This is outright bribery, Higson has said as much. The govt are effectively saying....untill you are privatised, no fix for your pension plan. Outrageous...

So what would be the purpose of privatisation if its not to sort put the pension pot?

Higher prices, reduced services.