Too big and politically important to fail?

[Celgar]

I don’t understand the massive fall in profits.. anyone explain?
as it said in the courier, there’s been a raise in parcels, and a 7% fall in letters but 24% less profits how does that work?!

Companies massage their figures for their own reasons generally. Take John Lewis who recently announced a 99% drop in profits. Logic would suggest that percentage fall in profits would suggest a company was in very serious trouble or about to go bust. Yet we have heard little more since so it's best to take any announcements with a pinch of salt. John Lewis had already cut the yearly productivity bonus they pay out their staff so the latest profit announcement was probably to enable further cuts in staff bonuses.

[wacko74]

I don’t understand the massive fall in profits.. anyone explain?
as it said in the courier, there’s been a raise in parcels, and a 7% fall in letters but 24% less profits how does that work?!

Companies massage their figures for their own reasons generally. Take John Lewis who recently announced a 99% drop in profits. Logic would suggest that percentage fall in profits would suggest a company was in very serious trouble or about to go bust. Yet we have heard little more since so it's best to take any announcements with a pinch of salt. John Lewis had already cut the yearly productivity bonus they pay out their staff so the latest profit announcement was probably to enable further cuts in staff bonuses.

Agreed.

And RM senior management have a proud history of cooking the books and making profits disappear (colleague shares anyone?) and generally talking down the fortunes of the business to use it as a stick to beat the workforce with.

I think one of the reasons for this latest doom and gloom forecast is possibly to justify a reduction in the USO when it comes up for review.

[rambo1]

Did anyone notice mr Back bought a hell of alot of shares as low as £2.99 quite recently? His unscheduled profit warning bagged him some cheap shares at least. To go with his multi million pounds salary. Far from me to insinuate anything untoward, just an observation.......

[Postie45]

Agreed.

And RM senior management have a proud history of cooking the books and making profits disappear (colleague shares anyone?) and generally talking down the fortunes of the business to use it as a stick to beat the workforce with.

I think one of the reasons for this latest doom and gloom forecast is possibly to justify a reduction in the USO when it comes up for review.

USO is not the issue, DSA is.

[wacko74]

Agreed.

And RM senior management have a proud history of cooking the books and making profits disappear (colleague shares anyone?) and generally talking down the fortunes of the business to use it as a stick to beat the workforce with.

I think one of the reasons for this latest doom and gloom forecast is possibly to justify a reduction in the USO when it comes up for review.

USO is not the issue, DSA is.

I'd say the senior management would like to see considerable reforms to both DSA and the USO.

[Celgar]

Agreed.

And RM senior management have a proud history of cooking the books and making profits disappear (colleague shares anyone?) and generally talking down the fortunes of the business to use it as a stick to beat the workforce with.

I think one of the reasons for this latest doom and gloom forecast is possibly to justify a reduction in the USO when it comes up for review.

USO is not the issue, DSA is.

I think you are correct for a number of reasons. Amending or even dropping the USO would save RM a lot of money potentially but it would fundamentally alter the nature and image of the company. They could do something like switching to a five day operation which would enable a drastic cut in staff costs. This one has been rumoured as an option for years with a probable dropping of Tuesday as a working day given how little mail is passed through on MCs for delivery on Tuesdays. Even this change could be seen to boost our competitors attractiveness as they operate a seven day service.
On the other hand removing ourselves from the DSA and other anti-competitive factors introduced by the EU and the regulators who are not even handed in their approach to RM would return all the revenue we lost. Postal prices we charge could be reduced by a fair percentage leaving us in the position of still having the best quality of service, reputation, and posties knowledge base but also closing the price gap between RM and the competing courier companies.
Surely this is the best option as it both retains jobs and improves the profitability of the business.

[Navalron]

I don’t understand the massive fall in profits.. anyone explain?
as it said in the courier, there’s been a raise in parcels, and a 7% fall in letters but 24% less profits how does that work?!

This is what I can't get. If mail has been falling 4%/6% per year for the last 13 or 14 years that would mean about only 25% of the early 2000s mail count still being posted. I think they need to start to count DOWNSTREAM ACCESS mail as 70% of companies now use other companies to pick it up, and dump it on RM , as do 55% of government departments. RM cannot even tell these companies how much the charge will be as the regulator sets the price. So these other SO CALLED postal companies who pay their staff bullshit wages, usually their self employed, just take the profit and let RM deliver. This is not freedom and the union should be publicising the facts about this system more to major shareholders who could put pressure on MPs and lobby for change as RM would make more money which means bigger dividends.

[rambo1]

I don’t understand the massive fall in profits.. anyone explain?
as it said in the courier, there’s been a raise in parcels, and a 7% fall in letters but 24% less profits how does that work?!

This is what I can't get. If mail has been falling 4%/6% per year for the last 13 or 14 years that would mean about only 25% of the early 2000s mail count still being posted. I think they need to start to count DOWNSTREAM ACCESS mail as 70% of companies now use other companies to pick it up, and dump it on RM , as do 55% of government departments. RM cannot even tell these companies how much the charge will be as the regulator sets the price. So these other SO CALLED postal companies who pay their staff bullshit wages, usually their self employed, just take the profit and let RM deliver. This is not freedom and the union should be publicising the facts about this system more to major shareholders who could put pressure on MPs and lobby for change as RM would make more money which means bigger dividends.

You're actually working it out wrong. It's for example, yr one, 100% , yr two, 95% of yr one. Yr three, 95% of yr two......and so on. It's not the same as just swiping 75% off yr one figures. Having said all that, any postie can see, mail isn't dropping as much as they say. And even if it were, it still takes as long to deliver, the frequency of calls is much the same, only one or two letters instead of four.

[Celgar]

Did anyone notice mr Back bought a hell of alot of shares as low as £2.99 quite recently? His unscheduled profit warning bagged him some cheap shares at least. To go with his multi million pounds salary. Far from me to insinuate anything untoward, just an observation.......

Within business circles it does show confidence for CEOs etc to buy shares in their companies or companies they work for and is sound business practice. This is aside from Mr Black receiving a free bung so it could be argued it's a free bet for him.

[SpacePhoenix]

They could do something like switching to a five day operation which would enable a drastic cut in staff costs. This one has been rumoured as an option for years with a probable dropping of Tuesday as a working day given how little mail is passed through on MCs for delivery on Tuesdays. Even this change could be seen to boost our competitors attractiveness as they operate a seven day service.

A reduction could happen for letters and flats but for parcels, Tracked and SDs I think a 7 day operation is more likely long term.

Also recipients being able to see where the postman is, how many deliveries before theirs and a time slot, that functionality seems to be becoming a standard feature for all our rivals. RM are going to have to look into it at some point

[DGH]

I think ideally, Royal Mail would like a 7 day operation, probably concentrating on delivering letters Monday to Saturday and on alternate days for non-specials (so you get mail delivered three days a week), but packets every day. However the USO and the regulator combine to make this impossible.

While most companies seems to think next day delivery is the holy grail (and that because because Amazon do), I think most people would actually prefer a 'specified day for delivery' option - so they could be sure to be in. Few companies offer this but I think it could be sold to them reasonably easily.

As for mail volumes, they really have fallen and pretty drastically. But the fall is not even. There is a solicitor I used to deliver to who a decade ago got a minimum of two full trays of flats and two full trays of letters every day. They now get a bundle's worth of both combined and it's sometimes a small bundle. Added to that is that during that time while overall mail has dropped substantially, RM has increased the size of most walks fairly dramatically. So you probably now deliver about 70-80% of the letter volume you used to but to about 120-125% of the houses (so a bit less overall but the rise of packets eats up time and the greater distance to cover eats up even more).

[crimson king]

They could do something like switching to a five day operation which would enable a drastic cut in staff costs. This one has been rumoured as an option for years with a probable dropping of Tuesday as a working day given how little mail is passed through on MCs for delivery on Tuesdays. Even this change could be seen to boost our competitors attractiveness as they operate a seven day service.

A reduction could happen for letters and flats but for parcels, Tracked and SDs I think a 7 day operation is more likely long term.

Also recipients being able to see where the postman is, how many deliveries before theirs and a time slot, that functionality seems to be becoming a standard feature for all our rivals. RM are going to have to look into it at some point

Cue lots of bemused people as they watch their 'postman tracking dot' on their phones drive past their road at half past two as they cut off again to finish on time

[postmanzach]

I don’t understand the massive fall in profits.. anyone explain?
as it said in the courier, there’s been a raise in parcels, and a 7% fall in letters but 24% less profits how does that work?!

This is what I can't get. If mail has been falling 4%/6% per year for the last 13 or 14 years that would mean about only 25% of the early 2000s mail count still being posted. I think they need to start to count DOWNSTREAM ACCESS mail as 70% of companies now use other companies to pick it up, and dump it on RM , as do 55% of government departments. RM cannot even tell these companies how much the charge will be as the regulator sets the price. So these other SO CALLED postal companies who pay their staff bullshit wages, usually their self employed, just take the profit and let RM deliver. This is not freedom and the union should be publicising the facts about this system more to major shareholders who could put pressure on MPs and lobby for change as RM would make more money which means bigger dividends.

You're actually working it out wrong. It's for example, yr one, 100% , yr two, 95% of yr one. Yr three, 95% of yr two......and so on. It's not the same as just swiping 75% off yr one figures. Having said all that, any postie can see, mail isn't dropping as much as they say. And even if it were, it still takes as long to deliver, the frequency of calls is much the same, only one or two letters instead of four.

Sorry i still don’t get the huge fall in profits, is it a fall from ‘expected profits’ from where the had some crazy efficiency savings which ain’t gonna happen? Or from last years? The courier didn’t really explain it.
As we deliver so many more parcels than last year I just don’t understand it. Is that huge fine Royal Mail had to pay responsible? The diesel prices can’t help.

Sure things will be fine once automation improves, like surely a packet and flat sorting machine can’t be too hard to make wonder how they do it in Tokyo!?

[SpacePhoenix]

At some point I think that RM are going to have to have a look at splitting the business into two. One handling letters, flats and d2d (possibly using machines that can sequnce the lot) and if the USO were to be axed only delivering a couple of times a week and the other handling Tracked and Specials (merger with PF perhaps), delivering 7 days a week

[viking1488]

No government would allow royal mail to fail.

I bet they would.

Look at the railways, water and power.

and British coal...thats just a few companies after privatization went tits up ... the government have a lot more to worry about than royal mail .... this is a private company and i think this 500 year old company in its present form is im sorry to say coming to its end .... i think we will know more about the future early next year as i quote Chief executive Rico Back said Royal Mail had put a "range of actions" in place to improve performance and will update the market on its strategy next year. will this effect us postmen and women only time will tell but i would think the answer to that is an obvious yes ... i also think there will be a big fight ahead to protect are jobs and working conditions i just hope the union will be there when the time comes but thats just my opinion .......... so back to Too big and politically important to fail? to big there are plenty out there who would like a bit of this big pie and politically important no we are not..... on shares one bargain hunter was Rico Back who snapped up £500,000 worth of shares last week. For now, caution is urged, with analysts and investors alike turning their attentions to the January trading update, before a ‘pivotal’ capital markets day slated for March, where an update on Back’s new five-year plan will be eagerly anticipated.