Tag: Business Post

Royal Mail review likely to prompt call for split

Posted by | Dec 17, 2007 | |

A wide-ranging review of the effect of competition on Royal Mail is expected to be announced today amid concerns that the group’s ability to provide a core service is being damaged.

However, the review is also likely to trigger strong pressure for a major revamp of Royal Mail, including splitting it in two.

As part of its licence to operate, Royal Mail must provide a universal service, meaning that post can be sent anywhere at a flat rate.

The postal group has asked Postcomm, the industry regulator, to modify this obligation to reflect its costs.

It has been unsuccessful in its request, although it has been allowed a series of stamp price rises.

In the review, rival postal operators, such as TNT and Business Post, are likely to be asked to help to fund Royal Mail’s universal service obligation.

John Grogan, the Labour MP for Selby, who has campaigned to keep full public ownership of Royal Mail, said: “If the private sector companies are strong enough, then I think they should make a contribution to the universal service.

The rival players are likely to resist such moves because they claim that they are disadvantaged by Royal Mail charging too much for them to use its infrastructure and also that Royal Mail is exempt from VAT while they have to charge it.

Instead they are expected to use the Government’s review to demand that Royal Mail’s operations are split up to promote more competition.

They want to see Royal Mail’s letters division, with which they compete, separated from its network operations, which they have to use for the final-mile delivery.

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Business Post strikes new blow to Royal Mail with demand for split

Posted by | Nov 15, 2007 | |

One of Royal Mail’s rivals is to petition the Government to break up the state-owned postal group, in an escalation of pressure for change from its competitors.

Business Post made the call as sales at its mail division, which competes with Royal Mail, rose 59 per cent. The company argues that last month’s Royal Mail strikes have made more people aware that there is a competitive postal market.

Guy Buswell, Business Post’s chief executive, is to make a formal request to the Department for Business for Royal Mail’s network to be separated from its sales operation in January. By then it intends to produce a detailed paper with outside consultants.

Mr Buswell said: “The Government must be wondering what to do with Royal Mail. If the network were separated from sales, it would end the questions of what is Royal Mail’s future. We want to help start the debate.”

The call for change will come as the term of Allan Leighton as chairman draws to a close. The Government could use the change to make substantial changes. Rivals want the business to be split so that there is no conflict of interest between Royal Mail’s sales operation – their competitor – and its network, which they have to use for the final mile of the delivery of post.

The postal regulator is considering the implications but has no powers to order a split. Royal Mail may offer to present separate sets of accounts, but that is unlikely to satisfy its rivals.

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Business Post Group plc Interim Results 2007/08

Posted by | Nov 14, 2007 | |

Business Post Group plc Interim Results 2007/08

Group revenues up 9% to £167m (2006: £153m)
Group revenues excluding Federal Express up 15%
UK Mail Revenues up 59% to £60m (2006: £37m)
Profit before tax (before exceptionals) up 50% to £4.8m (2006: £3.2m)
Profit before tax up 182% to £4.8m (2006: £1.7m)
Interim dividend of 6.4p per share (2006: 6.4p)

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Royal Mail posts drop in profits

Posted by | Oct 31, 2007 | |

Royal Mail said on last Wednesday 31st October revenue in its letter business was down 78 million pounds (USD 162 million) in the first five months of the current year and annual operating profit dropped by one third.

State-owned Royal Mail, which lost its 350-year monopoly on postal services last year and recently faced strikes by workers, said it expected to be trading around breakeven this year and next due to declining mail volumes and investment.

The group reported operating profit for the full year 2006-2007 year of 233 million pounds, in line with expectations, following a sharp rise in pension fund costs to 722 million pounds from 193 million, falling mail volumes and increased competition.

Royal Mail said it faced making annual payments of 800 million pounds over the next 17 years to cover both its pension deficit of around 5 billion pounds and ongoing contributions.

Royal Mail’s Chief Executive Adam Crozier has said the company desperately needs to modernise, and was investing around 4 billion pounds to do so, to compete and prevent the business from failing.

The firm has plans to reduce its workforce by around 40,000, or 27 percent, by automating mail sorting processes and to fight private competition from Business Post Dutch mail company TNT NV and others.

The growth of email, text messages and the availability of vehicle tax discs and television licences online have also dented profits.

The Communications Workers Union (CWU) said earlier this month over 130,000 staff walked out in a dispute over pay, pensions and shift changes, causing delays and disruption, particularly to firms dependent on mail order business.

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