Royal Mail delivers 61pc rise in profits

[TrueBlueTerrier]

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Royal Mail has reported a 61pc surge in annual pre-tax profits to £324m in a full year results that will boost the company ahead of its planned £3bn flotation.

The state-owned delivery company said pre-tax profits rose from £201m last year and a loss of £165m in 2011. Underlying operating profits soared 165pc to £403m from £152m last year.

Britain’s online shopping boom has fuelled a 13pc rise in revenues in the parcels division to £4.5bn and now account for almost half - 48pc - the revenues at the state-owned delivery business. Group revenues jumped 5pc over all to £9.3bn. Even letter revenues also rose 3pc on a like-for-like basis reflecting the sharp rise in stamp prices as well as the radical turnaround driven by Moya Greene, chief executive.

"We are reporting a strong financial performance. Our strategy is delivering. The transformation of Royal Mail is well underway," Ms Greene said in the statement. "Our modernisation programme, one of the largest of its kind in UK industry, is improving our productivity," she said.

On the numbers, Ms Greene added: “Importantly, operating profit margin after transformation costs increased from 1.7 per cent to 4.4pc on a like-for-like basis.”

The overhaul is continuing. Investment costs were £665m, up from £579m the year before which included £75m of redundancy payments, down from £129m the year before. Royal Mail said its delivery and productivity had increased 1.7pc across the core network.

The group closed nine mail centres during the year, taking the total reduction to 30pc over the past three years.

The strong performance will boost Royal Mail ahead of stockmarket listing, expected later this year. The business, which seemed in unstoppable decline just a few years ago, is lined up for what would be the biggest privatisation for 20 years. Ms Greene told reporters today that initital talks with investors over an IPO had been encouraging.

Last month Michael Fallon, the Business minister, said the Government would list the company “within the year”. He indicated that the listing was the favoured route but that all other options remained open, including a trade sale. The Department for Business is expected to appoint investment bankers to handle the historic privatisation within weeks.

A sell-off will rival the “Tell Sid” privatisations of British Gas and BP in the mid-1980s Thatcher government. In size and money raised, it would eclipse the £1.3bn float of defence firm Qinetiq in 2005 and the £2bn listing of Railtrack in 1995. Margaret Thatcher always opposed the sale of Royal Mail insisting she was “not prepared to have the Queen’s head privatised”.

[pinstripe]

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Stamp price rises and online shopping boom help Royal Mail profits to top £440m ahead of £3bn sell-off this yea



Royal Mail unveiled a big jump in profits to £440million today as it took another step towards privatisation and a £3billion stock market flotation later this year.

The result for the year to March 31 is more than double the £152million in 2012 as the state-owned firm benefited from the boom in online shopping and recent efforts to modernise the business, which included offloading £37.5billion in pensions liabilities to the Government.

Chief executive Moya Greene, who last year returned the core postal business to profitability after four successive years of losses, said it was a strong performance and that the transformation of Royal Mail was under way

The core postal business, which delivers the six-days-a-week universal service to 29million addresses, reported operating profits of £331million and improved its margin from 0.5 per cent to 3.9 per cent. Parcel deliveries now account for almost half of the group's revenues of £9.3billion in the last year.

The performance is expected to encourage the Government to cash in on the turnaround by pressing ahead with a privatisation this year, despite opposition from unions representing postal workers and managers.

Business Secretary Vince Cable today insisted there was ‘no alternative’ to privatising the Royal Mail and said the organisation still faces a ‘fundamental threat’ from email that meant it must be reformed in order to survive.

However, unions warned services will go into decline if the business is sold off.
Business Secretary Vince Cable, pictured in Downing Street today, said there was no alternative to selling off Royal Mail

Business Secretary Vince Cable, pictured in Downing Street today, said there was no alternative to selling off Royal Mail

It comes after a decade of cost-cutting which has seen employee numbers at the Royal Mail Group fall by around 50,000 to 150,000.

In its half-year results in November, Royal Mail reported that its UK parcel revenues were up by 13 per cent, with parcels representing 47 per cent of total group revenue.

Revenue from letters was 2 per cent higher following an increase in stamp prices earlier in the year, although letter volumes fell by 9 per cent.

The amount of junk mail also increased, accounting for around half the daily postbag.

The daily UK mailbag fell by four million over the year to 54 million items.

Ms Greene said at the time that Royal Mail was climbing out of a 'very deep hole', with all parts of the business profitable.

The preferred sell off option is believed to involve the public buying shares alongside City investors, in an echo of the ‘Tell Sid’ campaign that pioneered the public sale of shares in British Gas in the 1980s.

At least 10 per cent of the shares have been earmarked for the workforce, although it is not known whether staff will get them for free.

The Communication Workers Union will this week start balloting Royal Mail workers on whether to boycott the post of rival companies in a move which could lead to millions of items being left undelivered.

Around 120,000 members of the CWU will vote from tomorrow, with the result due on June 19.

Private mail makes up 44 per cent of the daily post bag, so a boycott would leave 26million items undelivered each day, including energy bills, statements, and business mail contracts won by companies including TNT and UK Mail.

The ballot will also gauge opposition to the plans to privatise Royal Mail and backing for a campaign of refusing to co-operate with new efficiency measures.

Dave Ward, CWU deputy general secretary, said today's results offered more evidence that Royal Mail should be kept in the public sector.

He added: ‘Improved productivity and modernisation has played a role in these good results. Privatisation isn't necessary and it would destabilise the workforce and the good progress being made. The support of the workforce is crucial to the success of the company.

‘Price rises have also clearly played a role in the rise in profits. Fattening the goose in the short term may lead to volume decline as customers seek alternatives. One thing's clear, under privatisation prices would rise further and services would be hit as private companies operate for profit, not for people.’

[iceman1277]

We as a work force have royal mail by the the balls if we could stick together but this will never happen. so we will allways get walk on, One upon a time the cwu did have some power but that's all gone now. All the doms will be laughing at us mugs as they go to get there bonus. I bet my dom going to get £10,000 grand he got £7,000 grand last year.

There will be more flexing and less overtime to hit targets year in year out and I think we can forget about a pay rise lol .

For once we need to get some balls or we are just going to get walked on!!!!!!!!!!!!!!!!

[UnhappyGremlin]

It's lies. All lies.
I don't trust a thing that comes from RM anymore.

[andy3665]

£403 million profit managers getting their bonus. Letters up by 3%, Revenue up by 5%.

Why then do the Government need want to sell Royal Mail as a business they say doesn't make money to sustain itself? Either their cooking the books to make the company look attractive or they need money desperately to use for other reasons.

Managers will be getting their bonus under the £400 million arrangement so what is the agruement against us getting our pay rise and bonus? CWU have a excellent hand to play now against Royal Mail.