Tag: Royal Mail

Royal Mail hit by pension costs

Posted by | Oct 31, 2007 | |

The group posted earnings of GBP 233m, but said that but for a £75m government loan, this figure would have fallen to GBP 158m – half the GBP 355m made last year.

Pressures from rising pension costs, falling mail volumes and increased competition were blamed.

The figures do not cover the period over the summer when Royal Mail was hit by a series of strikes.

Declining volumes of post, competition in the mail market and the rising use of electronic communication, such as e-mail, continued to eat into Royal Mail’s letters business, with revenues down GBP 78m during the first five trading months of 2007-08 on the previous year.

The revenue fall came despite a rise in postage prices in April.

We anticipate that the company’s current level of contributions to the pension plan will reduce to 22 pct in five years’ time from the existing level of 30 pct.

Royal Mail

These factors, in addition to the “huge investment” that the group is about to make to update its business practices, mean that Royal Mail will make no profit this year or in its 2008-09 period.

And it said that without the contribution from its unregulated European parcel delivery service, General Logistics Systems, one of the few areas of growth for the Royal Mail last year, the group would become loss-making.

There was no indication of the cost to its business from the strikes organised by the main postal union, the Communication Workers Union, between June and October.

Industry observers estimated that about GBP 260m was knocked off profits during this period as a bitter dispute over the firm’s modernisation plans, including unpopular reforms to its pension scheme and radical changes to working practices, led to a series of walkouts.

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Royal Mail Chief pockets GBP 1.1m as profits dive

Posted by | Oct 31, 2007 | |

Royal Mail’s Chief Executive, Adam Crozier, has been awarded GBP 1.12 million in pay and bonuses as the strike-ridden UK postal service reported a 34.3 per cent fall in profits as a result of increasing pension costs.

The group also revealed today it only expects to break even in the current financial year because of funding its company pension plan, increased investment and falling postal volumes.

Mr Crozier, who was criticised during the recent postal crisis for allegedly failing to attend talks with unions, was paid a basic GBP 633,000 as well as a GBP 469,000 performance-related bonus, some of which has been deferred into a long-term incentive scheme. With GBP 18,000 in benefits, Mr Crozier was rewarded a total £1.12 million.

Allan Leighton, Non-Executive Chairman at Royal Mail, who recruited Mr Crozier in 2003, was paid a performance-related bonus of GBP 200,000 on top of GBP 20,000 in basic pay.

The group admitted that the same competition and volume factors had impacted current trading, with profits down by GBP 78 million in the first five months of the financial year.

Royal Mail said today: “Key issues for the company as we move forward are the continuing high cost of funding the pension scheme, the continuing decline in volumes as customers move to other forms of communication and the beginning of the huge investment we will now make in the modernisation of the company.

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Royal Mail embarks on modernisation

Posted by | Oct 31, 2007 | |

Royal Mail Group today announced profits, in line with expectations, of GBP 233m for the 2006-07 financial year – a fall of a third from the previous year, principally as a result of a sharp rise in pension fund costs by £193m to £722m. Underlying profits, omitting the benefit of GBP 75m from the Government’s Social Network Payment to support the loss making Post Office network showed a steeper decline, at £158m, less than half the prior year’s result.

Royal Mail said that pressures on its performance from rising pension costs, falling mail volumes and increased competition underlined the urgency with which it now needs to put the next stages of its modernisation plan into action. The Group now has in place the key elements on which that programme is built:

• Around £4bn commercial funding package from the Government to enable us to modernise the business and incentivise our people through our new ColleagueShare scheme
• Agreement with the unions on the flexibility and changes in working practices that are vital to modernise successfully
• Support from the unions for the pension reform needed to allow the Group to become competitive and to protect a Defined Benefit pension scheme for our existing employees

During the first five trading months of the current year, 2007-08, the pressures of falling mail volumes and competitor activity in the wider communications market have become significantly more pronounced, with revenue in the Royal Mail Letters business down £78m compared to the same five months in 2006-07.

Key issues for the company as we move forward are the continuing high cost of funding the pension scheme, the continuing decline in volumes as customers move to other forms of communication and the beginning of the huge investment we will now make in the modernisation of the company. All these factors combined mean that this year and next we expect to be operating at around breakeven.

The full results for the year and a current trading update are set out in the attached statement from the Chairman and Chief Executive.

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UK Mail Awards 2007 winners announced

Posted by | Oct 31, 2007 | |

Once again top executives connected to the postal industry waited with bated breath on Tuesday night to see if their year’s hard work would be recognised and rewarded in front of 300 of their peers. The winners of the prestigious 2007 UK Mail Awards were announced at the annual gala dinner in London, attended by many of the leading representatives from the UK’s postal industry.

This was the fourth presentation ceremony of the Mail Awards, designed to recognise and reward best practice, across all parts of the industry. Entries were open to any UK-based postal operator, service provider or mailing agency. Presenting the awards at the Novotel London West, under eight different categories, was diving explorer and adventure journalist, Monty Halls.

All awards were selected by a distinguished panel of judges, independent of the sponsors and organisers, who met on Monday, the day before the ceremony itself, to determine the winning application from the many entries received in each category.

The winners of the UK Mail Awards 2007 are:

Corporate Social Responsibility – sponsored by Triangle
CitySprint for its Environmental Programme

Database Management – sponsored by Royal Mail
Datalytics for its EMAP Consumer Media (ECM) Subscription Retention project

Digital Print
WDMP for its Thomson Holidays – Anniversary Mailing

Downstream Access – sponsored by Royal Mail Wholesale
UK Mail

Innovation – sponsored by PA Consulting Group
Royal Mail for its Personalised Integrated Media (PIM) campaign powered by Sony DADC

Marketing Campaign – sponsored by Citipost
Royal Mail for its Stoplateness campaign

Mail Centre of the Year – sponsored by UK Mail
Bradford Mail Centre

Technology – sponsored by ME news
BFPO for its e-bluey technology

The organisers, Triangle, would like to publicly congratulate the winners, and also thank all the people and companies in the postal industry who entered, sponsored, judged and attended this year’s UK Mail Awards.

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Competition in UK starting to benefit smaller businesses

Posted by | Oct 30, 2007 | |

Research commissioned by Postcomm, the independent regulator for postal services, has found the benefits that large mailers have been experiencing since the market was opened have now started to slowly spread to smaller businesses. However, much more progress is needed and the challenge posed by growing alternatives to mail confirms the need for mail operators to continue to pursue greater innovation.

The market research, which forms part of Postcomm’s latest annual Business Customer Survey, revealed:
Although Royal Mail remains the dominant operator, one in five small and medium mailers and more than a third of large mailers are using more than one mail provider;
one in five respondents have explored alternatives to mail and have moved some of their mail to other media in the past 12 months which confirms the need for all postal operators to place more emphasis on customer service and innovation; and more than half of respondents agreed that competition has improved choice and more than a third believe competition has improved Royal Mail’s quality of service.

Also published today is Postcomm’s annual Competitive Market Review (CMR), which looks at factors affecting competition in the postal sector. Key findings of the CMR included:
– mail volumes were 2 per cent down on last year but there are indications that direct mail is growing in sectors such as building societies, charity, and health;
– end-to-end competition has declined by four million items and stands at less than one per cent of total mail volume, but mail volumes collected by ‘access’ operators and delivered by Royal Mail have more than doubled and now represent 19 per cent of revenue-derived mail volumes.

Both documents were launched at the UK Mail Show.

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