Royal Mail halves its annual losses

Royal Mail has halved its annual pre-tax losses to £611 million according to their latest results out today.

Turnover from continuing operations was £8.2 billion – down by £109 million on the previous year. However, Royal Mail said that as 2001/2002 was a 53-week year for accounting purposes, while last year had 52 weeks, the underlying picture was a small rise year-on-year in turnover of £50 million, a rise of 0.6%.

Losses from operations were, on average, £0.75 million per working day, compared to £1.2 million the previous year. Exceptional costs totalled £695 million, compared to £1.1 billion the previous year, and most of the new exceptionals related to provisions for voluntary redundancy.

However, Post Office Ltd’s losses grew to £194 million before exceptionals, up £31 million on the previous year. The loss underlines the need for the current urban re-invention programme which will, by 2005, see some 3,000 fewer urban sub post offices.

Parcelforce Worldwide, which has successfully completed its transformation to an express-only service for time-guaranteed deliveries for business customers, lost £187 million on operations, up from £94 million the previous year. It remains on course to break even in 2004/2005.

Over 16,600 jobs have gone from the company – around 5,500 people have taken voluntary redundancy, some 6,500 other jobs have transferred to other firms, mainly as a result of outsourcing deals, but also because of the contract for TV licensing going to Capita, while around 4,600 people were not replaced when they left the company.

Chairman Allan Leighton said last year had been a "year of progress" and now the organisation was aiming to return to profit this year.

The underlying loss from day-to-day operations was £197 million – over £120 million, or 38% better than a year ago – the first improvement in trading performance for five years.

Mr Leighton said: “Our people have stopped the rot. They deserve the credit that for the first time in five years, trading performance is getting better, not worse. They have laid the foundations for a turnaround and put the company at the start of the road to profitability.”

He added: “The really hard work is ahead of us as the middle year of any company’s recovery plan is always the hardest. We have to keep the company’s pension scheme on a sustainable footing and we face major regulatory pressure as Postcomm attempts to impose the price at which competitors will be allowed access to our network."

(GMcG)