Mail posts gloomy forecast
Royal Mail profits fell by a third in the 2006-7 financial year, mainly as a result of a sharp rise in pension fund costs.
The group faces operating at around break-even this year and next, it said.
Chairman Allan Leighton and chief executive Adam Crozier said pension costs, revenue decline through losses to competition and the overall fall in mail volumes meant Royal Mail’s letters division was heading towards break-even in the current financial year.
They added: “Without the contribution from GLS (General Logistics Systems, the group’s European parcels business), the group could again become loss-making.”
The group said profits for 2006-07 were in line with expectations at £233m, down a third, mainly due to pension costs rising by GBP 193m to GBP 722m.
Competition had developed much more quickly than anyone forecast. Rivals would this year be handling around 4bn letters, around one in every five posted – a level Postcomm had forecast would not be reached until 2010.
