Tag: Domestic

Rival postal operators eat into Royal Mail profit

Posted by | Aug 27, 2007 | |

When Royal Mail blamed its first operating loss in six years on increased competition, eyebrows were raised across the industry.

But new figures from Postcomm reveal that the 15 alternative licensed postal operators are clawing their way deeper into Royal Mail territory.

End-to-end delivery is still largely unfeasible for most of the newer service providers, with only 1 per cent of mail currently not handled by Royal Mail. However, according to Postcomm’s latest figures, access volumes have gone from 2.4 billion items at the end of the last financial year, to 4 billion between April and August. This now accounts for one in five items of business mail.

And with GBP 700m a year being earmarked for Royal Mail’s troubled pension scheme, and the fact that bulk business volumes are down 12 per cent, Royal Mail’s predicament starts to look pretty sticky.

But not all Royal Mail customers are willing to lend a sympathetic ear. Stephen Bentley, chief executive of response management and fulfilment house Granby Marketing Services, believes that Royal Mail’s troubles are due to a failure to keep costs under control. He is nervous the only way for Royal Mail to recover financially will be to increase prices.

“We’ve lost GBP 44 m this year on access mail that we’re handling on behalf of competitors,” says Budd. “The reality is that we are subsidising their businesses.”

But other parts of the business are looking up. In the first half of last year the regulatory report figures show that Royal Mail made a profit on first class mail, including franked mail.

Andy Fruin, external relations director at Postwatch, does not believe Royal Mail’s future is terminal. He concludes/ “Royal Mail has gone through a dramatic recovery before, and it will become a healthy company again.”

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Post Danmark H1 profits slump as revenues stagnate

Posted by | Aug 27, 2007 | |

Post Danmark saw its profits slump significantly in the first half of 2007 due to stagnating revenues and higher costs. It continues to expect a drop in full-year profits.

The partly-privatised postal operator achieved a net profit of DKK 355 million (EUR 47.7 million) in January-June 2007 compared to DKK 665 million (EUR 88 million) in the same period the year before. The operating profit dropped by 41pct to DKK 436 million (EUR 58 million) against DKK 741 million (EUR 99.57 million) the year before.

“The profit performance was clearly marked by stagnant revenue mainly due to the implementation of changes from the beginning of this year in relation to the subsidy for the distribution of dailies etc. as a result of which it is now paid directly to the media. A range of publishers have therefore decided to develop their own distribution network or to choose other distributors. In addition, revenue dropped for letters, magazine mail and unaddressed mail,” said Helge Israelsen, CEO, Post Danmark.

The domestic parcels business increased revenue, however, to DKK 861 million from DKK 655 million one year earlier. But its H1 operating loss widened to DKK 104 million from DKK 37 million, mostly due to higher transport costs.

Post Danmark’s operating costs also grew following the acquisition of Transportgruppen, new collective agreements in the spring, higher transport costs and the impact of a three-year voluntary early retirement program at Belgian Post, in which it holds a minority stake. Post Danmark said it is pursuing a number of initiatives in relation to production, transport structure and distribution to generate cost savings.

1 DKK = 0.0912605 GBP

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Hermes mulls legal steps if German government extends VAT exemption for Deutsche Post

Posted by | Aug 27, 2007 | |

Hermes, a Hamburg-based logistics groups, is considering legal steps if the German Finance Ministry extends the VAT exemption for Deutsche Post World Net AG beyond 2007, its Managing Director Hanjo Schneider told Frankfurter Allgemeine Zeitung.

The tax exemption violates EU law, he said.

Deutsche Post enjoys an exemption from Germany’s 19 pct value-added tax in its letter and parcel services in return for its promise to deliver mail to every German household.

Without this advantage, Deutsche Post would have to raise its parcel prices ‘substantially’, Schneider said.

Hermes, which owns 29 pct in TNT NV’s TNT Post, moved some 50 mln parcels last year.

Schneider also criticized government plans to introduce minimum wages for postal workers.

If Deutsche Post’s wage agreement becomes a benchmark for the industry, the road into the letter market for new providers remains blocked, he said.

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Norway Post: Continued growth, but lower earnings

Posted by | Aug 27, 2007 | |

Norway Post’s half year results show continued growth in revenue for the Group. The results are lower compared to the same period last year as a result of higher personnel and transportation costs. Norway Post is implementing initiatives to strengthen the profitability of the Post segment.

The Group has experienced positive development in operating revenues, which is in line with the Group’s Nordic growth strategy. Total operating revenues after the first six months were NOK 13.4 billion, an increase of 17.8 per cent from the same period last year. The ICT and Logistics segments contributed to revenue growth following acquisitions and high activity in the marketplace. Second quarter earnings in the Post segment were at the same level as last year.

Earnings before taxes for the first six months were NOK 879 million, compared to NOK 565 million for the same period last year. Earnings were high due to a profit of NOK 625 million from the sale of Norway Post’s distribution center building in Oslo during the first quarter. The Group’s earnings before taxes (EBIT) prior to adjustments for special items were NOK 268 million, compared to NOK 625 million after the second quarter last year.

The Post segment is the reason for the decrease in earnings, mainly due to increased personnel and transportation costs, and the establishment of CityMail in Denmark. The Logistics and ICT segments show positive growth prior to adjustments for special items. The EBIT for the ICT segment showed the same results as last year.

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Firms counting cost of UK postal walk-outs

Posted by | Aug 26, 2007 | |

Businesses are still counting the cost of postal strikes and say the action has the potential to lose them thousands of pounds. Royal Mail workers walked out in two 24-hour strikes followed by a campaign of staggered action, in which each division was allocated a different day to revolt in a bid to cause continuous disruption.

Members of the Communication Workers Union (CWU) were protesting at job losses which they say will come from modernization of the firm and have rejected a 2.5 per cent pay offer.

Royal Mail, which has been losing business to rivals since the postal market was opened to competition, says the changes are needed for it to stay competitive and vowed to keep delivering mail during the action.

Smaller businesses have felt the biggest impact from the strikes as orders and deliveries have been delayed.

Burslem-based Lorna Bailey Artware depends on Royal Mail to bring in responses to its mailshots.

“Potentially, it could cost us thousands of pounds. When mail shots go out they can turn over GBP 20,000. If it is late, it puts back the manufacturing and painting – all very problematic.

“It puts us in an awkward situation because we can use Parcelforce for larger parcels, but we don’t want to pass extra charges on to the customers.

Toy and book supplier Everything Dinosaur, based in Middlewich, relies heavily on the post for its mail order service.

Owner Mike Walley said the biggest concern was not knowing which division was on strike each day.

Mr Walley has introduced a new service using couriers in an attempt to overcome disruptions but said this is costing the company money.

He added: “We’re using couriers for some of the larger parcels, but it’s costing us money because we have offered it at a discounted rate.

The national strikes have now been called off and Royal Mail and the CWU are expected to reach an agreement by September 4. Royal Mail has pledged to get services back to normal as quickly as possible.

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