Royal Mail turned a profit on its core letters and parcels operations for the first time in four years, easing the way for the forthcoming privatization of the U.K.’s state-owned mail group.
The company posted a group operating profit of 211 million pounds ($329 million) in the year to March 25, compared with 39 million pounds ($60.8 million) a year ago, as revenue grew 4 percent to 9.5 billion pounds ($14.8 billion) after two successive years of decline.
The letters and parcels business swung to an operating profit of $25 million from a $187 million loss a year ago. Revenue grew $468 million to $11.2 billion as a 6 percent increase in domestic parcel volume canceled out a 6 percent decline in traditional letter deliveries.
GLS, the European parcels unit, boosted profit 8 percent to $200 million on a 5 percent increase in revenue to $2.4 billion. Competition is “intense,” and prices remain under pressure because of significant overcapacity, especially in core markets such as Germany.
“We are cash positive for the first time in four years, our profitability is improving, and we no longer have going concern issues,” CEO Moya Greene said.
“We expect that continued growth in online retailing will benefit our domestic and international parcels businesses. The decline in our core letters business is expected to continue. We will press ahead with our modernization program, cutting costs in the network.”
Royal Mail, which has cut around 50,000 jobs in the past decade, is being primed for privatization, via a trade sale or an initial public offering, in the fall of 2013.
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