Pre-tax profits surged to £233m, excluding special items, in the postal operator’s half-year results, compared with £94m in 2012. Revenues were 2% higher in the six-month period to 29 September, hitting £4.5m (2012: £4.3m).
Revenues from letters and marketing mail shrank by 5% and 3% respectively to £1.7m and £545,000, although this was offset by a 9% boost in parcel revenues, attributed to growth in e-retailing, to £1.5m (2012: £1.3m). Parcel revenue now accounts for 51% of the total group revenue.
Volumes of letters being posted fell by 6% to 6.5m, despite a boost from energy companies warning their customers of impending price hikes, while Parcelforce Worldwide volumes increased by 9% to 34m. UK parcel volumes were broadly unchanged due to the impact of the new sized-based pricing and a slow-down in e-retailing during the good summer weather. European performance remained strong.
Presenting the results, chief executive Moya Greene said they were in line with expectations. She highlighted ongoing customer reaction to the continued threat of industrial action, which had resulted in a slow-down in new business and customers switching to competitors to avoid the impact of potentials strikes.
Greene said that discussions with the Communication Workers Union (CWU) on a new multi-year agreement were ongoing. “Significant progress is being made on proposals for a legal framework to deliver a stable industrial relations environment, protections for employees and a competitive pay increase. A new agreement will create an agenda for change in Royal Mail and a new model for how we work together with the CWU. Building on pre-existing agreements, it will help us to complete our modernisation and build a strong platform for the future success of the company,” she added.
Greene said that the group was experiencing more competition from business mail deliveries but that the business was working to address that. “We are seeing increased competition in the direct delivery of business mail, with TNT Post UK extending its alternative delivery operations to Greater Manchester.
"Unchecked, this could lead to cherry-picking of more profitable, higher-density delivery areas and could undermine the sustainability of the Universal Service. We are reassured that the regulator will act to protect the Universal Service, given its primary duty, but we are not complacent.”
The CWU said the results showed there was no need for privatisation.
CWU general secretary, Billy Hayes, said: “These results are based on performance when Royal Mail was still in public ownership. The rise in profits is further proof that there was no need to privatise this successful company.
“A profitable, successful and well-loved institution was flogged on the cheap when these latest figures show it was healthy and in good hands. The government’s arguments continue to crumble.
“These profits should be public money, not paid out to hedge funds and city institutions in dividends.”
Share price soared from 330p to 568pin early trading.
