Royal Mail posts £144m half-yearly profit
Parcel delivery business drives jump in profits
By CFOWorld.co.uk staff | CFO UK | Published 14:49, 13 November 12
Royal Mail’s operating profits for the six months to 23 September rose to £144 million; up from £12 million noted over the same period a year earlier.
In an update on Tuesday, the Group said its operating profits rise was aided by the parcels delivery business as rising online shopping habits of Britons were having a positive effect on deliveries.
Revenues from UK parcel deliveries rose by 13 percent and parcels currently account for 47 percent of revenue across Royal Mail. However, letter volumes were down 9 percent, even as revenues rose 2 percent following stamp price rises instituted earlier this year.
Overall, Royal Mail’s UK letters and parcels unit reported an operating profit of £99 million, compared with a £41 million loss last year.
Royal Mail chief executive Moya Greene said, "A turnaround of the UK business is well underway. However, Royal Mail has experienced the negative impact of e-substitution, which is driving the structural decline in the traditional letters market.”
"Conversely, we are seeing the positive impact that online retailing is having on our parcel volumes," Green added.
Last month, Royal Mail announced a £75 million investment in its parcels business with a potential to create a 1,000 jobs. The Group also said that "preparations were underway" for its sale but that the structure and timing was a matter for the government.
Earlier this year, in a decision seen as a key step towards selling some of the business to private investors, the European Commission approved the nationalisation of the Royal Mail's pension scheme.
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