Royal Mail’s profit more than doubled, driven by surging parcel deliveries, in a major boost to the forthcoming privatization of the UK’s 363-year-old state-owned postal company.
Operating profit, adjusted for restructuring costs, jumped to £403 million ($613 million) in the financial year to March 31, from £152 million ($231 million) in the previous 12 months, as revenue grew 5 percent to £9.5 billion ($14.5 billion).
The parcels business, which is benefitting from a boom in online shopping, increased revenue by 9 percent to $6.4 billion, or 48 percent of group sales.
“We are reporting a strong financial performance. Our strategy is delivering. The transformation of Royal Mail is well underway,” said Chief Executive Moya Green, a former head of Canada Post.
“We are well positioned to continue to benefit from the structural change to e-retailing,” Green said.
The operating profit margin has improved to 2.2 percent from 0.4 percent last year, but “this remains modest, however, compared to other major postal operators,” Green said.
General Logistics Systems, the pan-European parcels unit, boosted profit to $205 million from $179 million on revenue of $2.37 billion, up 5 percent on the previous year.
An initial public offering of Royal Mail, which would be the UK’s biggest privatization for 20 years, is expected to value the company, which has 150,000 employees, at between $3 billion and $4.6 billion.
The government has said it plans to privatize Royal Mail by March next year, but Business Secretary Vince Cable today suggested a stock market flotation could take place as soon as the fall.
The Communication Workers Union, which represents the majority of Royal Mail’s workforce, opposes the privatization and is considering a strike.