Tag: UK

Royal Mail is to abandon all but its first and second class postal products and replace them with services it believes serve better the needs of its mostly commercial customer base. The move by Royal Mail, which yesterday reported record operating profits of Pounds 537m and an improved performance, is aimed at defending its market share before the industry opens to full competition in January. Testing of the new products on customers is to begin in June with an eye to a launch before the new year competition deadline. Royal Mail would not give details of the products but they are expected to focus on guaranteed delivery at specific times rather than speed. For instance, a mailshot delivery might be split over weeks rather than at once. Adam Crozier, chief executive, said: “Most of our (current) targets are based on speed but most of the time this isn’t what our customers want.”

Adam Crozier, the chief executive, says services used to be designed around what Royal Mail thought it could do. The trade and industry minister, Alan Johnson, used to be general secretary of the Communications Workers Union. He may need all his experience gained from that job in his new one. One of the tasks high on his to-do list is a review of Royal Mail in the run-up to the letters market being fully opened to competition. He is likely to face some tough talking from Royal Mail’s chairman, Allan Leighton. In a sense, Mr Johnson will be relieved that there is still something to talk about. Three years ago Royal Mail was in trouble: Mr Leighton dubbed it a “basket case” – a business the government could not even give away. It had the worst strike record in Britain, it was losing pounds 1m every working day, wages and morale were at rock bottom and the Equal Opportunities Commission was contemplating an investigation into harassment and bullying. Its very ability to trade as a going concern was in doubt. Since then, Mr Leighton and the executive directors under the chief executive, Adam Crozier, have led a dramatic turnround, though as yesterday’s remuneration packages revealed, they have been well rewarded under the company’s long-term incentive plan.

Royal Mail today announced a record GBP537 million profit on its operations for 2004-05 with quality of service to customers now hitting the highest levels in a decade. Royal Mail’s Chairman, Allan Leighton, said: “Postmen and women have achieved a fantastic turnaround. “They will now deservedly get a Share in Success payment of GBP1,074 amounting to GBP218 million of the company’s profit. It’s one of the biggest profit shares with employees in UK corporate history.” Mr Leighton said other highlights included First and Second Class mail, along with all Mailsort and Presstream bulk mail services and Standard Parcels, hitting or exceeding their target levels since last July. Since October the results for First Class mail and Mailsort and Presstream bulk mail are the best in a decade, latest figures show the number of letters lost has almost halved, and 99.92% of the mail arrives safely. There has been a 144% increase in the profit on operations for the financial year to March 2005 with the GBP537 million result comparing to a GBP220 million profit the previous year.