ROyal Mail completed a major step in its transformation yesterday with a huge increase in half-yearly profits that has helped pave the way for privatisation.
Chief executive Moya Greene said the performance showed that the group was now climbing out of the “very deep hole” it had been in, with all parts of the business now profitable.
Preparations are now under way for the sale of the group and although Greene said the timing of Royal Mail’s privatisation was a matter for the UK government, she believed the organisation could not generate the investment it needed in the future by itself.
“We have made significant progress across all fronts, but more remains to be done. We are focused on continuing the turnaround of our business and securing the external capital we need to complete the transformation of Royal Mail,” she said
She added that the group’s modernisation programme involved “painful, difficult change”, with almost every aspect of work being transformed.
”I believe our people generally understand the need for the company to continue to adapt to a rapidly changing postal market and that the company and the unions need to work together for the benefit of both our customers and our colleagues.
Group operating profits in the six months to September were £144 million, compared with £12m in the same period last year.
Growth in parcel deliveries is making up for a continued fall in the number of letters being sent.
UK parcel revenue was up by 13 per cent, with parcels now representing 47 per cent of total groufp revenue.
Revenue from letters was 2 per cent higher following the increase in stamp prices earlier this year, although letter volumes fell by 9 per cent. The amount of marketing – or junk – mail increased, accounting for around half the daily postbag.
The daily UK mailbag has fallen by four million over the past year to 54 million items.
Business minister Michael Fallon said the figures showed the company was on the road to “sustainable health and long-term viability”.
He said the structure and timing of the privatisation of the group remained open.
But the Communication Workers Union said the performance proved that modernisation of the Royal Mail can be successful within the public sector.
Deputy general secretary Dave Ward said: “There is no need for privatisation as a solution to business transformation. Change is being successfully delivered by postal workers daily throughout the company.
“Royal Mail is doing its bit to change, but the regulator must now step in to protect the universal service.”
Ward said competition from private companies was undermining Royal Mail’s ability to provide an affordable service to every part of the UK.
“We want a fair day’s work for a fair day’s pay, bringing quality postal services to everyone. That’s being undermined by the way competition destabilises the universal service – companies being allowed to cherry-pick profitable contracts while paying low wages for example.
“There’s also a problem with pressure that Royal Mail managers are putting on delivery workers to make unrealistic cost savings.”