Royal Mail delivers small profit, but not network efficiency
The British postal service said it made a profit of '3 million ($5 million) through the first six months of its fiscal year, it's first first-half profit in five years.
Operating profit was '55 million ($92 million).
In the first half of last year, the Royal Mail Group lost '542 million, including '147 million from operations.
The British postal service is in the middle of a three-year turnaround program to become profitable after years of huge losses, but officials said the modest financial gains were due to an increase in basic postage in May, not operational efficiencies. Meanwhile, the organization's costs continue to rise with a multi-year phase in of a 14.5-percent pay increase for 165,000 postal workers and millions in extra pension liabilities.
The letters business is the sector where we need to make the biggest operational changes, yet it's the area of the renewal plan where we have made the least progress,' said Adam Crozier, chief executive officer, in a statement. 'The letters business is the only way we can deliver long-term, sustainable improvements in customer service, while generating sufficient cash to run our business. The key task for the rest of this year is to achieve the operational changes in Royal Mail as rapidly as possible by moving to a single daily delivery, improving the efficiency of the mail centers and streamlining the transport operation.'
The government-owned company's parcel delivery unit, Parcelforce Worldwide, stemmed losses by 40 percent to '59 million ($99 million). The business is now focused on handling express, time-definite parcels for business customers.