The U.K.’s Royal Mail more than tripled first half earnings to $105 million, as increased profits from its European express unit offset losses on domestic letter deliveries.
The state-owned postal company, which is being primed for privatization, boosted operating profit from $34.5 million in the first six months of 2010, while revenue rose 6 percent year-over-year to $7.2 billion.
General Logistics System, which deliveries parcels in 42 European countries, increased profit to $91 million from $80 million on revenues of $1.22 billion against $1.1 billion a year earlier. This more than offset a $22 million narrower loss of $64.4 million on domestic letter and parcel deliveries, where Royal Mail competes with private companies.
The company’s post office branch network lifted profit to $83.4 million from $28.3 million.
“The necessary measures we implemented earlier in the year – increasing our prices and tight cost control – are a key part of our strategy to return Royal Mail to sustained financial viability,” said CEO Moya Greene. “They are beginning to deliver results. But, we have a great deal to do.”
The government has passed legislation to privatize the 361 years old Royal Mail but has yet to decide between a stock market flotation or a sale to a strategic investor or private equity. Timing of the sale depends on the government securing approval from European Union regulators to significantly reduce Royal Mail’s $2.8 billion debt and take over its historic pension deficit of about $7.2 billion.
Greene said privatization is unlikely before 2013 because progress has to be made on many issues.
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