Moya:More cost-cutting to come

[POSTMAN]

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Royal Mail ‘under pressure’ despite extra trade from City Link collapse
CEO Moya Greene says 4% rise in Christmas parcel deliveries and profits in line with forecasts are not enough to halt further cost-cutting

The boss of the privatised Royal Mail has said the business was still under intense pressure despite seeing a 4% rise in parcel deliveries over Christmas and benefiting from the collapse of rival City Link.

Moya Greene, the CEO, said she had no option but to push through further cost-cutting, amid predictions that 3,000 more jobs will go across the company.

“The sad demise of City Link demonstrates what we have been saying - the UK parcels market remains highly competitive, with significant over-capacity,” said Greene.

“These conditions – of too many players chasing traffic – will continue to put pressure on prices for the next couple of years. We firmly believe the long-term prospects for the delivery sector remain positive, underpinned as it is by the continued growth in e-retailing,” she added.

The difficulties in the parcel delivery sector were despite a stronger operational performance for Royal Mail in December, partly due to having won customers from City Link.

Royal Mail delivered 120m parcels over Christmas - a rise of 4% over last year. Its shares rose by 4% on Thursday after it predicted full-year profits would be in line with expectations.

Despite the rise in the share price Royal Mail has still lost more than a quarter of its value since the £3.3bn stock market flotation 18 months ago.

The number of parcel deliveries across the nine months to 28 December by the Royal Mail was up 3% while letters were down by 3% – but that number was still better than the forecast fall of between 4% and 6%.

Greene said postmen and women provided an excellent service over the busy festive period. “This is because we started to plan for Christmas in April, putting investment behind extra sorting capacity with 10 temporary hubs and training around 19,000 extra people.”

Industry experts said Royal Mail had axed almost 50,000 jobs over the last 10 years and 3,000 more could go over the next 12 months, leaving the group with 145,000 staff.

The employees are all leaving under voluntary severance schemes, in contrast to the abrupt departure of nearly 2,400 staff at City Link. Royal Mail is known to have taken customers from City Link which finally called in the administrators after years of substantial losses. Rival delivery companies such as Yodel, owned by the Barclay brothers, and Hermes are also fighting for dominance.

Some of the job losses at Royal Mail are due to the introduction of mechanised sorting.

The company says it is under pressure due to its commitment to the universal service obligation, allowing anyone in the UK to post letters or parcels to any other part of the country at the same price. Royal Mail complains the obligation is being undermined by rivals such as former TNT Post business, now-called whistl, who are “cherry picking” deliveries in the more accessible city areas, making it harder to cross-subsidise deliveries to less-accessible areas. But the business secretary, Vince Cable, has accused the company of “scaremongering”.

Analysts now expect Royal Mail to report annual operating results before special charges of around £585m for 2014/15. Richard Hunter, Head of Equities at Hargreaves Lansdown Stockbrokers, said: “The initial euphoria following the float has worn thin, with the share price having dropped 28% in the last year, as compared to a 2% dip for the wider FTSE100.

“The general sentiment is that the valuation is up with events, such that the market consensus of the shares as a hold is most likely to remain intact following this statement.”

The company remains under pressure from the drop in letters which has also resulted from the increasing use of emails. The parcels arm is also being hit by web-based businesses such as Amazon, which are opting to establish their own operations.

[General Mannerheim]

Feck off.

[Red Robbo]

It's because of these predictions that we need to keep Billy Hayes as General Secretary !!

[GT750rider]

As a result of these findings I can announce I will be taking a pay cut, and foregoing my bonus.
Yours faithfully,
Moya. Not.

[Judgee]

I agree we definitely need more job cuts.... so how many managers and executives are they going to get rid of?

[Surreypostie]

I agree we definitely need more job cuts.... so how many managers and executives are they going to get rid of?

0

[rubberbond]

Planning for Christmas in April, in my office they usually start in December.................for the previous year

[El-Bandito]

If Moya is predicting 3000 job losses then you can expect 7000 full time Jobs. 1000 natural wastage, 6000 full time to be replaced with 3000 part time or less. Close to 10% gone. Next year will be very similar. Expect the hys meetings coming up to be all doom and gloom.

[pants123]

hope you have a lovely day..

[pants123]

how about cost cutting the human life forms in the board room.... that be a good start.. the humans that know how to make the workers LIFE in royal mail a misery..

[aiden01]

how about cost cutting the human life forms in the board room.... that be a good start.. the humans that know how to make the workers LIFE in royal mail a misery..

only if you let them make your life a misery

[Brain Fury]

I agree we definitely need more job cuts.... so how many managers and executives are they going to get rid of?

As I am sure you know, about 1000 "managers and executives" were made redundant last autumn including a third of the top 250 managers in the business. That was the latest in a long line of managerial cuts stretching back at least 10 years. There's no doubt that at one time these were justifiable but more recently it's just a case of economics with no regard to the required level of manpower. They simply cut posts and then wonder why things aren't getting done anymore.

[Budfrog]

I agree we definitely need more job cuts.... so how many managers and executives are they going to get rid of?

As I am sure you know, about 1000 "managers and executives" were made redundant last autumn including a third of the top 250 managers in the business. That was the latest in a long line of managerial cuts stretching back at least 10 years. There's no doubt that at one time these were justifiable but more recently it's just a case of economics with no regard to the required level of manpower. They simply cut posts and then wonder why things aren't getting done anymore.

And there is still an Annual intake of Graduates, some of whom end up taking on the responsibilities of those that have left, talk about a revolving door it shows what a pathetic bunch the CMA area . There is now a drive to improve the accuracy of Traffic Measurement when the number of TMMs and PHGs on this type of work has been reduced over the years well no-one saw that one coming did they . Whilst some surplus manager have been placed onto WCM RM seem to be getting into the habit of forcing out the ones that want to stay whilst not offering VR to those that actually want to leave. Some of the heavy handed tactics used to 'encourage' or 'coerce' staff to leave have been highly questionable with all managers leaving on VR being required to sign a compromise agreement in which they surrender their rights to full MTSF terms and prevents them from raising any other claims against RM in the future. I just hope that one day someone has the balls to take this lot to court and expose precisely how the business operates against it's own people of all grades.

[redandblue]

If there has been such a cull in managerial grades, how come there are 4 managers doing next to nothing all day in our office?
I don't believe a word of it. RM could get rid of at least 50% of the remaining managers, and no one would notice.

[Budfrog]

If there has been such a cull in managerial grades, how come there are 4 managers doing next to nothing all day in our office?
I don't believe a word of it. RM could get rid of at least 50% of the remaining managers, and no one would notice.

A bit harsh ... Clix shareholders wouldn't be too happy