Royal Mail Group Third Quarter Trading Update

[TrueBlueTerrier]

Royal Mail Group Third Quarter Trading Update
21/01/2009


• 3rd Quarter revenue of £2.6 billion compared to £2.5 billion last year
• All four businesses in profit for first time in almost 20 years
• On track to achieving quality of service targets
• Modernisation programme on track to deliver
• Year-to-date profit of £255 million compared to £162 million for the whole of 2007-08
• On course to deliver full year profits of nearly double 2007-08 performance

Royal Mail said today that despite the severe economic downturn and further falls in mail volumes driven by more use of email and other electronic communications, overall Group revenue rose nearly 3% during the first nine months of the 2008-2009 financial year to £7.2 billion. For the first time in almost 20 years, all of the Group business units are in profit, with Royal Mail Letters, the Post Office and Parcelforce Worldwide making an operating profit along with GLS, the Group’s European parcels business.

A trading update covering the nine months to Christmas showed Royal Mail Group making a £255 million operating profit before exceptional costs - compared to £162 million for the whole of 2007-08. Royal Mail said it is on track for an annual profit nearly double the level it achieved last financial year.

Allan Leighton, Chairman of Royal Mail Group, said: "The company and its people have come a long way in just six years when Royal Mail was losing more than £1 million a day and routinely failing quality of service targets. A huge amount has been done to put the business on a stable footing - something many believed was not possible - and having established a firm base on which to build for the future, we are getting on with our modernisation plans and catching up on decades of under-investment."

The improved financial performance while upholding customer service comes as Royal Mail continues to modernise the Letters operation, which has now automated the handling of almost 80% of total mail volumes, compared to less than 65% two years ago. During the last 18 months, the company has begun to upgrade automatic sorting equipment in many mail centres nationwide, the installation of the first of a new generation of "intelligent" letter sorting machines has commenced, more technology to sort more A4-sized mail - including catalogues and magazines - has been installed, and Royal Mail drivers have been equipped with hand-held scanners which read the barcodes on Special Delivery and other tracked mail and can provide electronic confirmation of delivery within minutes.

Adam Crozier, Chief Executive of Royal Mail Group, said: "Royal Mail’s modernisation plan agreed with our shareholder, the Government, is on track to deliver across the period of the plan, with more than £600 million spent on transforming the Letters business since the investment plan was agreed in 2006-2007. We have plans in place to spend every penny of the £1.2 billion commercial loan agreed by the Government in 2007 over the plan’s lifespan to 2011, which will clearly help us to improve efficiency and deliver even better service for our customers. There will be a need, however, to access further investment in a timely and flexible way as we compete increasingly with electronic communications as well as with other postal operators, while at the same time dealing with the effects of the current economic recession. We have therefore welcomed the Government’s intention to raise further funding through the sale of a minority stake in Royal Mail, which will also allow us to retain and bring in people down through the business with the right skills and experience in operational change we need for the next stage of our transformation."

The huge challenges still facing the company include:

• The accelerating structural decline in mail markets around the world, with volumes expected to decrease by around 7% in the UK over the next 12 months, and the increasing competition facing Royal Mail with electronic media already costing the company five times more profit loss than the impact from rival mail companies;
• The effects of the current economic recession;
• The one-price-goes-anywhere universal service remains loss-making and under threat;
• The urgent need to tackle the growing legacy pension fund deficit so that the financial benefits of modernisation and greater efficiency can flow through to customers in the form of better services rather than being absorbed by unsustainable payments into a volatile pension fund.

Mr Crozier added: "For all these reasons we must step up the pace at which we are transforming Royal Mail, otherwise, as the recent Hooper report made clear, we face decline. The challenges from competition and the structural decline in the mail market are growing not diminishing - these latest results show the progress we are making but we still have much to do in order to secure the future of the one-price-goes-anywhere Universal Service to the UK’s 28 million addresses."

Royal Mail has already firmly welcomed the recommendations of the Hooper review, as the report’s conclusions address these major challenges. The Government has also said it endorses both Hooper’s analysis of the challenges and the review’s recommendations, including the sale of a minority stake in Royal Mail to help accelerate its transformation plans while securing the future of the Universal Service, the Government addressing in some form the historic legacy of the pension fund deficit, the Post Office remaining 100% in public ownership, and the recognition that Royal Mail is competing in a wider communications market, not just against other mail operators.

Ends

Issued by Royal Mail Group:
148 Old Street
LONDON
EC1V 9HQ


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[pcb]

It appears that we have made 255 million pounds in 9 months, so it appears that stage 3 sackings, non filling of vacancies, conduct codes and reductions in special C leave is working for Crozier and Leighton. Lets not forget they are still sitting on over half of the 1.2 billion they got of government last year. You couldn't make it up!

[trythat]

Mr Crozier added: "For all these reasons we must step up the pace at which we are transforming Royal Mail, otherwise, as the recent Hooper report made clear, we face decline. The challenges from competition and the structural decline in the mail market are growing not diminishing - these latest results show the progress we are making but we still have much to do in order to secure the future of the one-price-goes-anywhere Universal Service to the UK’s 28 million addresses."

I assume this means, we must cull the work force a lot quicker than we are now, I have to justify my bonus some how, and putting people out of work, is the ideal way to earn it.

[norbert]

It appears that we have made 255 million pounds in 9 months, so it appears that stage 3 sackings, non filling of vacancies, conduct codes and reductions in special C leave is working for Crozier and Leighton. Lets not forget they are still sitting on over half of the 1.2 billion they got of government last year. You couldn't make it up!

Same chapter - same story ! - firstly it's all gloom and doom , RM 's mail is apparently well down , losing money hand over fist , then there's the Hooper review which is everything that Senior Mgt wanted , :mfo wants part privatization , :lfo & :cfo are on their way out but they go out in a blaze of glory - what a coincidence

RM have been accused of not being transparent with their figures , I wouldn't think for a moment that there had been any legal creative accountancy

there's a new boss on a £1million plus salary tasked with putting POL into profit - how nice for him
next announcement will be that bears s**t in woods and the Pope's a catholic

[dvbuk55]

Hey it's not all doom and gloom with that sort of profit we should be in for a bumper pay rise.

[DGP1]

Hey it's not all doom and gloom with that sort of profit we should be in for a bumper pay rise.

Maybe we'll get a 10% bonus like the staff at Northern Rock

[dvbuk55]

Hey it's not all doom and gloom with that sort of profit we should be in for a bumper pay rise.

Maybe we'll get a 10% bonus like the staff at Northern Rock

Never mind the staff what about the 100% shareholders? I hope we'll be given a dividend - maybe we'll be invited to the staff xmas party this year, who knows what goes on behind financial closed doors.

[POSTMAN]

pig.gif

[borders]

why the hell do we need to be privatised after results like that ???

[bogstandard]

Maybe we'll get a 10% bonus like the staff at Northern Rock

at present i don't get anytrhing so how much is 10% of that worth, is it lots, please,please,please say it is.

[andy2007]

why the hell do we need to be privatised after results like that ???

So that the "Top Brass" can get a big bonus, and TNT can make a fortune out of us.

[TrueBlueTerrier]

why the hell do we need to be privatised after results like that ???

So that the "Top Brass" can get a big bonus, and TNT can make a fortune out of us.

As Billy said on Tuesday "Privatise the profits and Nationalise the debts"