Royal Mail announced a $120 million expansion of its parcels business to offset declining postal deliveries and keep pace with the rapidly growing online retail market.
The state-owned mail group said its Parcelforce unit will build a new processing center and two new depots, modernize another nine depots and add 1,000 jobs to its 4,500 payroll over the next four years.
Royal Mail’s parcel operations contributed 4.2 billion pounds ($ 6.7 billion) of the group’s 9.5 billion-pound ($15.2 billion) revenue in the fiscal year to March 25, driven by strong retail growth and increased volumes at GLS, its Amsterdam, Netherlands-based pan-European express unit.
Parcelforce, which delivered 66 million parcels in the U.K. last year, says the U.K. parcels market is worth $9.3 billion a year.
Royal Mail, which is being primed for privatization in late 2013 or early 2014, earned $25 million on its core mail and parcels operations in fiscal 2012, its first profit in for years, as 6 percent growth in parcel volume offset a 6 percent decline in mail deliveries.
The company posted a group operating profit of $337 million, up from $62.4 million a year earlier.