Consignia racks up £1.1bn of annual losses

Consignia racks up £1.1bn of annual losses
By Sarah Laitner and FT.com staff
Published: June 13 2002 8:44 | Last Updated: June 13 2002 8:44

The cost of consigning the Consignia name to history could top £1m ($1.47m), as the mail company announced losses for the year of £1.1bn and 17,000 job cuts.

The rebranding plans and losses were detailed on Thursday by Allan Leighton, chairman. He said that by the end of 2002, the company’s corporate name would become Royal Mail Group. Consignia attributed most of its £1.1bn loss to restructuring costs. However, losses of £318m on its day-to-day operations added up to a £1.2m loss every trading day, with all core businesses recording losses. While group turnover grew by 3.6 per cent, this was outstripped by a 4.8 per cent rise in costs, Consignia said.

Mr Leighton said: “Unresolved issues and problems stretching back for up to a decade are reflected in these results. This loss didn’t spring up over just one year”.

Consignia also announced that 17,000 jobs would become redundant within three years, with the aim of cutting £1.4bn of annual gross costs by mid 2005.

Billy Hayes, the General Secretary of the Communication Workers Union, said the union would insist that “any and every job cut” was justified by management and that it would not affect the service nor impact adversely on remaining employees. Delivering mail to every door in the UK is a labour-intensive operation. Indiscriminately shedding staff is not an option if we are to continue the universal service,” he said.

John Roberts, chief executive, on also announced on Thursday plans to retire, with the government set to begin the search for his successor.

The main cost of Consignia’s rebranding is expected to come from altering the signs on all its 3,000 buildings to meet company law requirements. The Consignia name was adopted when the Post Office Group received plc status in March 2001. But it became one of the most ridiculed corporate rebrandings in recent memory and synonimous with the financial crisis engulfing the company. Consignia stressed the change to the Royal Mail name, which would take place “in months, not weeks”, would be done at as little cost as possible. It is likely to lose its website under the rebranding, with the information going to the Royal Mail site.

Critics of the Consignia name welcomed the proposed change. Mr Hayes said: “If a decision is taken to get rid of the ludicrous Consignia title the union will be pleased to see the back of it.”

Mr Leighton, the driving force behind dropping the Consignia name, who has combined his role at the company with 10 other directorships, on Wednesday resigned as a non-executive director of Scottish Power. He currently spends two days a week at Consignia although expectations are growing that he may devote more of his time to the company.