British postal service profits slump 78% before sale
Royal Mail Group, Britain's state postal service, announced Tuesday that annual profits slumped more than 78 percent as the embattled company gears up for more job losses and privatisation.
Royal Mail said operating profit slid to £39 million (44 million euros, $64 million) in its year to March 2011 from £180 million the previous fiscal year, as a large drop in the number of letters posted offset a cost-cutting drive.
Group chief executive Moya Greene said Royal Mail's UK Letters & Parcels and International Business lost more than £2.0 million a week in 2010-11 as the public preferred to keep in touch via email and text messaging.
The average Briton now spends just £18 per year on postage, according to Greene, while mobile phone texts comprise 50 percent of all personal messaging.
"Royal Mail has been in significant financial difficulty for a number of years, reporting negative cash flow four years in a row," Greene said in the company's earnings statement.
"We are honoured to collect and deliver the mail on behalf of households and businesses across the UK. But, our industry, along with our European peers, is in decline," she added.
Royal Mail has cut about 65,000 full and part-time positions since 2002, including 5,500 in the past year, while a dozen mail centres have closed and a further 16 are set to shut.
As a result, total operating costs fell from £9.0 billion to £8.9 billion over the past year.
The state company last week moved a step closer to privatisation after parliament approved legislation enabling the firm to be sold.
Under the plans, private companies will be allowed to buy up to 90 percent of Royal Mail Group. Postal workers will receive the other 10 percent of shares -- the largest proportion ever handed out to employees of a state company becoming private.
The government meanwhile intends to take on the Royal Mail's pension fund, including its hefty deficit, when the group is privatised in 2012.
© 2011 AFP