Consignia falls short of government profit target
Consignia, formerly the Post Office, failed to meet government-set financial targets by £88m ($123m) last year and produced “disappointing” post-tax profits of only £66m.
John Roberts, chief executive, blamed the “self-inflicted damage” of unofficial strikes for much of the poor performance when he announced Consignia’s results for the year to March 2001.
Disputes, he said, were playing into the hands of competitors. “We have to stabilise industrial relations. It is important that our people understand that if we are not able to get it under control, there will be an impact on jobs.”
Consignia, said Mr Roberts, faced “significant challenges” in the year ahead, above all to win back the confidence of customers.
Supporting him Neville Bain, Consignia’s chairman, admitted the results were disappointing and said the level of profit was insufficient to provide a satisfactory return to the government as shareholder.
About 62,000 days were lost because of industrial action – mainly unofficial – last year. Consignia has spent £100m on a programme to raise basis pay for staff in return for reduced overtime and more flexible working. But industrial action prevented the achievement of full productivity gains. Rail delays were another factor in Consignia missing delivery and financial targets.
Last year Consignia, then the Post Office, made a post-tax loss of £264m. But this was because of the exceptional impact of the government’s withdrawal from Horizon – a plan for the automated payment of social security benefits through post offices.
Although Consignia is now profitable, this year’s results are in many ways more worrying for Mr Roberts and his colleagues because they reflect deeply rooted problems facing the organisation.
It is struggling to improve industrial relations and raise productivity at a time of increasing market pressure.
Competition in the international sphere is already intense and is about to spread into the domestic market under government liberalisation plans. Traditional postal services also face growing pressure from alternative technologies such as e-mail.
Consignia’s turnover rose by 7.9 per cent to £8.1bn, even though mail volume grew by only 2.7 per cent against targets of 3.4 per cent. It has completed the introduction of Horizon technology in post offices but, because the system will now not be used for social security benefits, this has added £70m to Consignia’s cost base.
Financial Times
