Royal Mail Group has turned a loss into a profit in its UK letters and parcels arm as it revealed details behind its strategy to develop into a more parcels-focused business ahead of its planned privatisation.
The Group’s first half profit for the six months ending 23 September leapt to £99m, from a loss of £41m in the same period a year ago. This came mainly as a result of a 5.6% rise in parcel volumes which now accounts for 37% of overall revenue in its UK parcels, international and letters (UKPIL) division.
UKPIL saw a 6.1% increase in Q2 turnover to £3.6bn, up from £3.4bn in September last year. The firm claimed that the growth was an “encouraging early indicator” that its parcel strategy was working, with targeted price increases and greater focus on service for smaller businesses cited as key drivers in turnover.
On 30 October it revealed plans for Parcelforce Worldwide to invest £75m in its network and hubs over the next four years
Royal Mail Group chief executive Moya Greene said: “We have made significant progress across all fronts, but more remains to be done. We are focuses on continuing the turnaround of our business and securing the external capital we need to complete the transformation of Royal Mail.”
Its half year financial report revealed that preparations are now underway for the sale of Royal Mail Group but it cautioned that the structure and timing of the transaction was a matter for the government; that all options were being considered and there could be no certainty about the outcome.
Greene stated that the firm’s modernisation programme involves “painful, difficult change”.
“Almost every aspect of work at Royal Mail is being transformed. We understand that we are asking a great deal of our front line colleagues, managers and representatives. We are committed to consulting fully with our people and the CWU [Communication Workers Union] on all these changes,” Greene said.
