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17/11/2005
Royal Mail profits boosted by parcels
Royal Mail has reported a rise in profits, despite a seeing a fall in earnings in its letter business.
The group reported a 20.5% increase in operating profit to £159 million for the first half of 2005/06 – a £27 million improvement on the same period the previous year.
However, the Royal Mail’s letters business, which accounts for around 76% of the group’s revenue, made an operating profit of £168 million – a decrease of 3% on last year’s figures.
The fall came despite a below-inflation 1.8% overall rise in postage prices at the beginning of April.
However, the group’s European parcels business, General Logistics Systems and Parcelforce Worldwide, performed better financially. GLS performed particularly strongly with a £43 million operating profit in the first half of the year – almost double the £23 million profit in the same period a year earlier. Allan Leighton, Royal Mail Group Chairman, described GLS as the “star performer”, with “an impressive record of revenue and profit growth”.
Parcelforce Worldwide also increased its external turnover by £10 million, despite “increasingly tough conditions” in its market, Royal Mail reported.
Mr Leighton said: “These latest results underline the massive and unprecedented challenges facing Royal Mail.
“We’ve come a long way since we launched the Renewal Plan in 2002 when the company was losing more than £1 million every day.
“But in just over a month’s time the postal market opens to full competition and Royal Mail is facing the prospect of the regulator imposing a price control, which will undo the remarkable turnaround achieved in the last three years by our people.”
Royal Mail has been opposed to plans by the postal regular, Postcomm, to put a cap on the price of stamps, meaning that first-class stamps could rise to no more than 34p by 2010.
Adam Crozier, Royal Mail’s Chief Executive, said: “Royal Mail needs to have a fair and balanced pricing structure to compete for business mail. Instead, the regulator is proposing a pricing straightjacket.”
The UK postal market is due to be opened to full competition on January 1.
(KMcA/SP)
The group reported a 20.5% increase in operating profit to £159 million for the first half of 2005/06 – a £27 million improvement on the same period the previous year.
However, the Royal Mail’s letters business, which accounts for around 76% of the group’s revenue, made an operating profit of £168 million – a decrease of 3% on last year’s figures.
The fall came despite a below-inflation 1.8% overall rise in postage prices at the beginning of April.
However, the group’s European parcels business, General Logistics Systems and Parcelforce Worldwide, performed better financially. GLS performed particularly strongly with a £43 million operating profit in the first half of the year – almost double the £23 million profit in the same period a year earlier. Allan Leighton, Royal Mail Group Chairman, described GLS as the “star performer”, with “an impressive record of revenue and profit growth”.
Parcelforce Worldwide also increased its external turnover by £10 million, despite “increasingly tough conditions” in its market, Royal Mail reported.
Mr Leighton said: “These latest results underline the massive and unprecedented challenges facing Royal Mail.
“We’ve come a long way since we launched the Renewal Plan in 2002 when the company was losing more than £1 million every day.
“But in just over a month’s time the postal market opens to full competition and Royal Mail is facing the prospect of the regulator imposing a price control, which will undo the remarkable turnaround achieved in the last three years by our people.”
Royal Mail has been opposed to plans by the postal regular, Postcomm, to put a cap on the price of stamps, meaning that first-class stamps could rise to no more than 34p by 2010.
Adam Crozier, Royal Mail’s Chief Executive, said: “Royal Mail needs to have a fair and balanced pricing structure to compete for business mail. Instead, the regulator is proposing a pricing straightjacket.”
The UK postal market is due to be opened to full competition on January 1.
(KMcA/SP)
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