Call to axe Consignia Chiefs as losses mount

Consumer watchdogs yes-terday urged the government to sack the chairman and chief executive of Consignia, the state-owned postal group, after it announced a 500 per cent increase in first half operating losses to Pounds 100m.

Neville Bain, Consignia’s chairman, said the loss underlined the urgency behind the company’s recently announced plans to cut its Pounds 8bn cost base by Pounds 1.2bn by April 2003 – about 15 per cent.

But Postwatch, the consumer watchdog, said Mr Bain and John Roberts, Consignia’s chief executive, should be sacked for allowing the company’s bloated costs to wipe out profits, which peaked at Pounds 608m in 1999.

“Surely the time has come to review the future of the Consignia leadership following yet another set of appalling results,” said Peter Carr, Postwatch chairman.

Consignia said its operating loss for the six months to September 23 was Pounds 100m, up from Pounds 20m in the first half of last year.

Turnover was up by just 2.6 per cent to Pounds 4.007bn, about a third of the increase at the same time last year.

Consignia usually performs better in its second half, which includes the Christmas period. However, the slow pace of growth in turnover suggests it is likely to post a bigger loss for the full year than last year’s Pounds 3m.

Mr Bain said making an operating profit for the full year would be “challenging”.

Consignia blamed the first-half loss largely on Parcelforce Worldwide, its parcels brand, which consumed about Pounds 110m of cash and is expected to make a loss of about Pounds 200m for the full year.

The company said it had written down the value of its Parcelforce assets by Pounds 221m, increasing the loss after exceptional items to Pounds 281m. “This follows a decade of losses and is a position we cannot sustain,” said Mr Bain.

Consignia is offering financial help to persuade delivery drivers to become self-employed, and opened talks with the postal unions last week on a shake-up of its distribution system, centred on a state-of-the-art “hub” at Coventry.

Mr Roberts warned that productivity would have to improve quickly if the company was to return to profits in the face of tough trading conditions and the gradual introduction of competition in its core letters market.

Consignia has invested about Pounds 100m in its Way Forward deal on working conditions with the postal unions, but productivity has risen by only 2 per cent over the 12 months to September, against an overall cost increase of 6 per cent.