LTB No: 347/13 ROYAL MAIL GROUP FINANCIAL RESULTS

[TrueBlueTerrier]

Letter to Branches




No: 347/13

21st May 2013

To: All Branches with Postal Members

Dear Colleague

ROYAL MAIL GROUP FINANCIAL RESULTS

You will be aware that the Royal Mail Group has today announced its financial results for the year 2012-13. The results demonstrate a significant improvement in profit from £152 million last year to £403 million this year.

The company state that increased profits have been driven by the improved performance of UKPIL (United Kingdom Parcels, International and Letters Business). In particular, there are three reported elements that account for the overall profit. These are:-

Parcel and packet growth
Improved productivity
Price rises

However, Royal Mail have not specified how much of the overall profit can be attributed to each of these elements.

We have attached to this LTB a briefing paper prepared by our Research Department which goes into more detail on the results. We have also attached a copy of today’s CWU press release.

It is important to convey to CWU members that Royal Mail’s profits demonstrate that the company can be successful in public ownership and that privatisation is not necessary.

Any enquiries should be addressed to the DGS (P) Dept.

Yours sincerely

Dave Ward
Deputy General Secretary (P)



Royal Mail Group preliminary results for 2012-13

Overview

Royal Mail announced its preliminary results for 2012/13 on 21st May. This is the first full year with the new regulatory regime and following the separation of Post Office Ltd from Royal Mail Group. The results show significant improvements in profits (up to £403m from £152m last year); revenues (up by 5% from last year); and profit margin (standing at 4.4% compared to 1.7% last year). Royal Mail puts this down to three key factors: price increases, productivity (modernisation) and parcels growth.

The improvement in performance was driven by UKPIL (Royal Mail Letters and Parcelforce) which made a profit of £294m, up from £33m in 2011-12. UKPIL’s profit margin now stands 3.9%, up from 0.5% last year. GLS remains profitable but is facing a challenging climate – its operating profit of £101m was down from £128m, though it remains the more profitable part of the group, with an operating margin of 6.7%.

Royal Mail Group

Revenue, profits, operating margin and cashflow all improved for RMG in 2012/13 on the previous year:

revenues increased by 5% to £9.15bn;

profits stood at £403m, up from £152m;

its operating margin stood at 4.4% up from 1.7%; and

cash inflow stood at £334m, up from £154m.

Royal Mail has only published group-wide figures on people costs rather than breaking these down by segment. These show that FTE numbers reduced by 1.9% over the year while people costs for increased by 4%. Royal Mail attributes this to the cost of the 3.5% pay increase, the shorter working week, the implementation of the Agency Workers Directive and higher ongoing pension costs.

UKPIL (UK Parcels, International and Letters)

The improvements in group-wide performance were driven by UKPIL:

revenues were up by 6.2% to £7.6bn;

profits stood at £294m, up from £33m; and

its operating margin was 3.9% up from 0.5%.

Royal Mail has stated that three factors underpin this: price increases, parcels and productivity. On the first two of these, addressed letter volumes declined by 8%, but price increases meant addressed letter revenues increased by 3% - and on parcels, UKPIL volumes increased by 5% while revenues were up by 13%. In both cases then, revenues rose ahead of volumes as a result of the increased pricing freedom Royal Mail has now been given.

Looking at the balance of mail, parcels accounted for 38% of UKPIL revenues, while making up 5.8% of volumes – addressed and unaddressed letters account for 62% of revenue, while making up 94% of volumes. In light of these trends, in its results statement Royal Mail lists ‘being a successful parcels business’ alongside ‘managing the decline in letters’ as two of its three strategic priorities.

In relation to modernisation Royal Mail spent £195m in 2012-13 and reported a 1.7% improvement in productivity across the core network over the year. 79% of mail is now being walk sequenced up from 75% last year.

With regard to the new regulatory regime Royal Mail has stated that less than 10% of its UK revenue is now subject to price controls and notes that the relaxation in the controls has been a key driver of profits this year. For the second year running Royal Mail has reported a profit on its access mail which accounts for approximately half of addressed letter volumes.

GLS

Royal Mail’s statement describes GLS’s performance as ‘resilient’ difficult trading conditions in Germany and France and the impact of a stronger pound:

revenues were up by 2% excluding the impact of currency movement, but showed a 4% decline in real terms once this is taken into account;

profits stood at £101m, down from £128m last year – £7m of this decline was due to currency movement; and

its operating margin was 6.7% down from 8.2%.

Other

Royal Mail’s statement says very little about its ‘other’ businesses (Romec, NDC and Quadrant). However, combined, these showed a significant improvement on the previous year:

revenues stood at £15m, up from £13m; and

profits stood at £8m, up from a £9m loss last year.


21st May 2013

For immediate release


Royal Mail results show success in public ownership


Responding to Royal Mail’s results today (Tuesday) which show profits almost doubling to £403 million for the year 2012-2013, CWU says that modernisation in the public sector should continue.


Dave Ward, CWU deputy general secretary, said: “Today’s positive results are more compelling evidence of why Royal Mail should be kept in the public sector.

“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.

“But overall today’s results are positive. They show Royal Mail is doing well and that privatisation is not necessary. The company can afford to reward postal workers with a pay rise.”


CWU is balloting members in Royal Mail starting Wednesday. Four questions will be asked, including whether postal workers oppose privatisation, whether they would support a private mail boycott in deliveries and questions on pay and workplace issues. The ballot closes on June 18 with the result due to be announced on June 19.

-ends-

For more information please contact:

Sian Jones, Press Officer, tel: 020 8971 7267, mobile: 0779 3314249, e-mail:sbjones@cwu.org

Kevin Slocombe, Head of Communications, mobile: 07714504413, e-mail:kslocombe@cwu.org

http://www.cwu.org" onclick="window.open(this.href);return false; http://www.cwutv.org" onclick="window.open(this.href);return false; Twitter: @CWUnews

[macetheace]

where is my bonus ???

[comeracing]

where is my bonus ???

and mine

[iceman1277]

where is my bonus ???

and mine

come on cwu get some balls and get us a pay rise royal mail made over 400 million profit !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

[demon]

We want a big pay rise as well . And let's get rid of some of these managers there far to many now

[spoodoo]

Here here ! Reward the grafters for change! Instead of the fat piggies getting everything !

[Dee Plish]

We want a big pay rise as well . And let's get rid of some of these managers there far to many now

Profits would be even higher without the amount of money wasted on managers that, literally, do nothing.

[Rommagic]

We deserve a payrise, after a massive profit.

[iceman1277]

We deserve a payrise, after a massive profit.

dom will be get a nice big bonus for all the money they have saved!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

[Judgee]

At least they can't use the same old "we are broke" argument when telling the union how much we're not getting as a payrise this year!

Ooops I mean't 'negotiating' with the union over the payrise issue!

[POSTMAN]

UKPIL (United Kingdom Parcels, International and Letters Business).

Eh?

[nataddick]

A closer examination of the results shows that operating profit is AFTER transformation costs. £665 million was invested back into the business - so why is external capital needed ? These transformation costs will disappear in the future leaving a very healthy profit for the new owners.

Extract from RMG preliminary results 2012/2:-

Operating profit and margins after transformation costs
• Reported Group operating profit increased to £440 million. The operating profit margin increased from 1.7 per cent to 4.4 per cent on a like-for-like basis.
• UKPIL generated a reported operating profit of £331 million and its operating profit margin increased from 0.5 per cent to 3.9 per cent on a like-for-like basis. The UK business is now the biggest contributor to Group operating profit.
Cash flow
• EBITDA before transformation costs was £915 million. £665 million was invested back into the business, which was mainly transformation-related.

[nataddick]

One of the best articles I have seen in the press appeared in The Guardian yesterday - very good anti-privatisation arguments and exposes the 'myth' relating to the need for external capital !

http://www.guardian.co.uk/commentisfree ... -privatise" onclick="window.open(this.href);return false;

[spoodoo]

So all this 2 in a van rubbish was just to maximise profits for selling it off !......?..