Consignia has failed to achieve its financial target

The British post, trading as Consignia plc. since March, has clearly failed to
achieve its financial target for 2000/2001 (the financial year ending 31 March). Although the turnover went up by 8% to 13.527bn euros, the main part of this amount was due to acquisitions, according to the company’s managing director Mr Neville Bain. The 287m euros result (after tax and before additional expenses) fell 147m euros short of the performance target negotiated between the government and Consignia. A profit was made possible only through the 177m euros interest yield. Normal business operations resulted in a 5m euros loss. Mr Bain said last year had been ‘disappointing’ because of
the failure to achieve the target. According to Mr Bain, the reason was that ‘growth was weaker than expected in many areas’. The financial report, which is very meagre for a plc, contains financial data only for the group as a whole as well as for the areas Letters and Distribution, Branches and Other.
Figures regarding the absolute letter and parcel volumes or their results are lacking. The only disclosed figure concerned the letter sector, which is said to have grown by 2.7% in Britain, while plans had aimed for a 3.4% growth. Consignia claims this development is due both to poorer business statistics and to a substitution process through electronic media. The company also admits that its service has declined, e.g. did the performance rate for First Class mail sink by two points to 89%. This again is said to be due in equal parts to delays in railway transports and to unofficial strikes organised by the trade
unions, which led to 60,000 workdays being lost during the financial year 2000/2001.
Consignia says normal business operations before tax for the Letters and Distribution division resulted in a 8.35ml euros loss (the previous year saw a 479m euros profit), while the Branches area experienced a 89m euros loss (compared to a 77m euros profit the year before) and Other generated a 92m euros profit (80m during the previous year). Mr Bain explained that Consignia invested 494m euros during the last financial year in order to improve core business efficiency, particularly with Royal Mail. However, massive investments were still required to lift the company onto the same level as its competitors. ‘We are currently planning to spend 3.2bn euros over the next five years.’