why are we modernising?

[Night Tonic]

Register if you want to read it. Look, if you are going to ruminate based on figures you don't even know, you have nothing worthy of debate do you. RML contributed 0.3% in 2006 so 1% is a step forward. This idea that we are profitable and everything can stay the same does not stack up unless you believe the guff from the pie man or what Fred told you on his frame.

Last one out turn out the lights eh.

[BELIAL]

Go on ,post the study Nighty ,let EVERYONE read it I dare you Nothing to hide ,nothing to fear

[Night Tonic]

No none. Now put your fag packet away.

---------------------------------------------------------------

Royal Mail operating profits plunge

By Brian Groom, Business and Employment Editor - Financial Times

Published: November 2 2010 11:34 | Last updated: November 2 2010 11:34

Royal Mail’s half-year operating profit fell 72 per cent to £52m as its core letters business returned to the red, underlining the state-owned company’s fragile trading position as the government prepares for privatisation.

The company blamed a continuing drop in mail volumes and competition from rival operators and electronic media for the decline in the six months to the end of September, down from £184m in the same period last year. Its operating profit represented a return of just more than 1 per cent on group-wide revenues of £4.4bn, down from £4.57bn a year ago.

The letters business moved from a £48m profit last year into a loss of £66m, with letter volumes falling to a daily average of 68m items – 16m fewer than five years ago, when volumes peaked.

Volumes fell 5 per cent in the first half, slightly less than last year’s recession-driven 7.3 per cent decline, but there are fears this could accelerate.

The Department for Business said: “These results really bring home the need for action. The situation is not sustainable and that is why we are pressing ahead with our plans.”

In spite of the weakening financial position, executives believe Royal Mail – which eight years ago was losing £1m a day – can still be attractive to investors if the government goes through with measures in its postal services bill to take over the group’s £10.3bn pension deficit and lighten the regulatory burden.

The coalition wants to sell all or part of Royal Mail through a flotation or a sale within two to three years. Trova Consulting, a corporate advisory company, re-cently valued Royal Mail at between £700m and £5.7bn, underlining the difficulty of pricing the business.

Moya Greene, Royal Mail’s chief executive, said conditions were “exceptionally tough” but new technology and more efficient working practices had limited their impact.

Royal Mail cut 2,800 jobs in the half-year. The letters arm was by far the worst performing division, al-though Post Office profits more than halved to £20m.

The group’s other two businesses, Parcelforce Worldwide and GLS, the European parcels business, achieved small increases in earnings in spite of intensifying competition.

Ms Greene said: “Both these businesses are unregulated, showing what we can achieve when we are allowed to compete fairly – which is why we are saying that the heavy regulation suffocating Royal Mail in the competitive.

“With widespread predictions in the postal world that mail volumes will continue falling, perhaps by up to 40 per cent over the next five years in the UK, it’s absolutely vital we step up the pace of modernisation.”

[Geordie]

Let's not forget the profit RM are about to make on door to door.

According to them, the average numbers of drops around the country was 2 per week.

I know some will query my figures (but they make the maths simple) - but 600 calls at 1.67p is £10.02.

£10 paid to 100,000 postmen/women is £1 million.

Or in other words, for every door to door drop RM get above 2 per week, they make £1 million clear profit on top of what they were already making.

If they can increase the average number from 2 to 3 per week, then thats a clear £150 million per year profit.

Some areas are now doing 6 per week...............

[chrisj]

Que?

I dont get your simple figures! Not only do I query the amount paid to the postmen, you have forgotten to add costs to your profit figures.

[fishtank]

Its operating profit represented a return of just more than 1 per cent on group-wide revenues of £4.4bn, down from £4.57bn a year ago.

That doesn't mean....

Letters now make up barely 1% of RMG revenue these days.

My dog has a better understanding of economics...

[chrisj]

NightTonic,

Just because it is written in the financial times does not make it true. Anyway, Royal Mail does not know precisely how many letters they have in the system? I have worked in some MC, and there way of counting is workers putting tally marks on board or loose sheets - very haphazard. Do we count returned letters?

So letters have dropped but as highlighted by others and the articles itself when you include DSA, letters volumes have not dropped significantly overall. Letters are still being sent but the share of it has reduced for RM even though we are still distributing most letters (inc our competitor). Profit on letters is down because we are dealing with the least profitable side of the letter business.

So nighttonic, you are not comparing like for like. This is the sort of argument given by the government to justify their case for privatisation.

It will be interesting to see the reverse side of the argument (my side of the argument); by how much has the profit from packets and registered.specials gone up? We need the whole figures, balance sheet and P&L account not just figures from a journo. Lies, damn lies and statistics.

Anyway, as a postman, do you think (anecdotally) that the mail volume(all including DSA) in your bag has gone down by 10%?

[chrisj]

Financial Times: same source different perspective:

http://www.ft.com/cms/s/0/8240d8d2-df94 ... abdc0.html" onclick="window.open(this.href);return false;

# November 8, 2010
Royal Mail ‘fattened up’ for sell-off
...regulator was accused of “fattening up” Royal Mail for privatisation on Monday after it...lighter-touch regulatory regime to give Royal Mail more commercial freedom in markets where...class stamp could go up by 4p to 36p. Royal Mail, which currently loses 6.4p for each... By Brian Groom, Business and Employment Editor

# October 24, 2010
Royal Mail in regulation plea over sell-off
Royal Mail is pressing ministers for a drastic loosening...the plan to sell off part or all of Royal Mail may fail to attract investor interest...union plans to ballot 8,500 managers at Royal Mail, Parcelforce and the Post Office on whether... By Brian Groom, Business and Employment Editor

[BELIAL]

See it's nice to share
Apparently my fag packet is working a bit better than your powers of comprehension. You seem to be confusing profit with revenue.

You see -

Thats just a fact. As Postman said, it would not have been as bad without DSA. Letters now make up barely 1% of RMG revenue these days.

- means something completely different to-

Its operating profit represented a return of just more than 1 per cent on group-wide revenues of £4.4bn, down from £4.57bn a year ago.

As you can see from the article ,there is no mention RM Letters revenue only it's operating profit expressed as a percentage of group revenue.

Curiously enough the £4.4 billion revenue mentioned differs substantially from the £6.564 billion that Fishy has reproduced from the published accounts. Now just supposing that the £4.4 billion is a 6 month figure and considering the end date of the period,September, that leaves October to March to come . Would you accept that this is not traditionally one of our quieter periods ? Lets assume not ,so a conservative estimate for annual revenue might be 2 x £4.4 billion . £8.8 billion represents a massive growth in revenue , strange that with 1000's less on the payroll profits still plummet. You don't think they are front-loading all the costs of automation and business transformation into one years accounts do you?
RM and figures eh, consistency has never been one of their stronger points.
Thanks for sharing ,sincerely appreciated.
Off now to get some Superkings

[chrisj]

All said and done, profitability is still an issue (night_y has a point) because the government wants more profits despite putting a lot of constraints, unfair competition and stringent regulations on RM; thereby stopping RM making more profit.

They have left RM with limited options to improving their profit to Re: cutting costs, staff/cost and pension deficit - unfair!!!
:dcfo :ncfo :vcfo

My bags are heavier - that I know!

[Big Daz]

If you take Moyas figures on DSA then RML would actually doing allright if RML could charge the correct rate.

Add on whatever RML contribute to the group pension deficit payments and voila a profitable healthy company is revealed.

[POSTMAN]

Nighty,i mean come on pal.

[Tman]

Anyway, Royal Mail does not know precisely how many letters they have in the system? I have worked in some MC, and there way of counting is workers putting tally marks on board or loose sheets - very haphazard. Do we count returned letters?

That would be a very haphazard way of counting; maybe that's why RM have used automation counts for 30+ years?

Seems like too many still believe that this is how it's done, and therefore the counts could be at best incorrect and at worst falsified?

Then again, many still like to believe DSA somehow isn't "counted" in mail volumes, and "my bag's just as heavy" as a denial of falling volumes.

[TrueBlueTerrier]

What are you after this time Tman, Bass, trout, Herring, Kipper -your bait is getting a bit old though.

[POSTMAN]

Mail volumes have declined in some areas at least,what part of what they count and say is there to what is actually sent to DO's don't you understand?

EDIT:The above is hard to read to me but you guys get my drift yes?