Post Office to reverse losses in three years
John Roberts, the Post Office chief executive, on Tuesday said the company planned to turn last year’s net deficit of £264m ($378m) into a profit of £300m within three years, despite a new regulatory regime that will cut up to £100m from net profits.
Mr Roberts said hitting the “demanding” target would require a reduction of about 5,000 in the company’s 200,000 workforce, saving about £50m a year, and an end to unofficial strikes, which have cost 30,000 working days this year.
Most of the increase in profits would come from better marketing and growth in higher margin activities such as parcels, bulk contracts and sorting other countries’ mail.
Mr Roberts said the volume of high margin bulk items being handled by the Post Office has risen by more than 10 per cent this year, even though the volume of mail has risen by only about 2 per cent.
He said the Post Office was also considering a number of international alliances and acquisitions to exploit a forecast rise of 100 per cent in the European market in the next 10 years.
It has acquired 17 European parcels companies for about £500m over the past two years and has just been given approval by the European Commission for a joint venture with Singapore Post and TNT Post Group of the Netherlands.
Mr Roberts said the Post Office expects to return to profit this year, despite an interim net loss of £80m reflecting the continued impact of a £571m write-off last year relating to a failed computerisation project.
The target of £300m net profits by 2003-04 depends on separate decisions on the Post Office’s monopoly to be made shortly by the European Commission and the Postal Services Commission, the UK industry regulator.
The Commission is expected to cut the current maximum monopoly over letters weighing less than 350 grammes.
Mr Roberts said the Post Office, which will change its name to Consignia and become a government-owned plc on Monday, was close to agreement with the regulator on the details of its operating licence.From Monday the Postal Services Commission, will also determine the scope of the Post Office’s monopoly and licence competitors.
