Royal Mail Problems Posted In 06/07 Year Report

The Royal Mail announced today that profits over the last financial year have been significantly hurt by an unforeseen increase in employee pension contributions, one of the subjects of the recent nationwide postal strike that disrupted postal services.

The Royal Mail group reported today that it had raised over £230 million in revenues over the course of the financial year, including a government loan of £75 million to help with cash flow, which in real terms takes revenues down to just 50% of their levels last year.

The reports released today cited growing competition for deliveries amongst the major factors for the fall in earnings over the period, as well as growing pressures on its pension costs as a result of miscalculations of employee life expectancies led to a growing pensions ‘hole’.

Interestingly the Royal Mail also drew on the growth of email as a communications method as a factor playing on its performance over the period, having a direct impact on the volume of mail passed through the system which is currently at one of its lowest levels in decades.

Worryingly for the Royal Mail revenue over the period fell despite a strong rise in postage costs, suggesting that the price increases may have had a more serious compounding effect on the volume of mail handled by the group.

Unfortunately for the Royal Mail the figures released today bear no correspondence to the disruption of this summer and the industrial dispute that brought the network to a stand-still.

It remains to be seen how the Royal Mail will fare under the pressures of the industrial action, and indeed whether the disruption will only deepen their problems of recent months.

Story link: Royal Mail Problems Posted In 06/07 Year Report