Royal Mail Exceeds $400 Million Profit

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Royal Mail made a $401.4 million profit on its operations and improved its customer service in the first half of its 2004-05 financial year, the United Kingdom postal company said yesterday.

The latest results show Royal Mail is on target to complete its turnaround from where it was losing $1.85 million daily in 2002 and facing future cash flow difficulties. The company now is making $1.85 million daily on its operations.

The latest service-quality report, also published yesterday, shows that 92.1 percent of First-Class letters arrived the day after posting in the July-to-September period. This was among Royal Mail's best performances in a decade and almost four points better than the 88.3 percent achieved from April to June 2004.

Performance has improved for 14 of Royal Mail's 15 targets. Seven target levels were exceeded in the July-September period. Service quality is also higher than it was in the 2001-02 financial year, the year before Royal Mail began its three-year renewal plan, when First-Class annual performance was just under 90 percent.

Losses have been cut in Post Office Ltd., the division encompassing retail post offices, and revenue has grown from the expanding range of financial services the Post Office Ltd. network provides. Also, Parcelforce Worldwide's income is up, its losses have been halved and it continues to benefit from its focus on express services for businesses. Parcelforce Worldwide is Royal Mail's parcel division. In addition, Royal Mail's European parcels business, GLS, has become profitable with increased volumes, incomes and margins.

"Overall, across the whole business, profitability has improved and the jobs of nearly 195,000 people have been changed -- probably the biggest transformation program in UK industry in a quarter-century," said Allan Leighton, Royal Mail's chairman.

Leighton said the company was on target to achieve a $739.3 million profit on operations for the full 2004-05 year.

Adam Crozier, Royal Mail's chief executive, said the operational changes that introduced a single daily delivery, streamlined the transport operation and improved efficiency at mail centers were almost complete.

Royal Mail also said Second-Class mail performance for July-September reached 98.6 percent compared with the 98.5 percent target. Also, several of Royal Mail's business mail services reached levels in the high 90s.

Overall, the seven most used Royal Mail products, covering nearly 80 percent of its mail volume, improved in the company's second quarter, with six exceeding their target level. The seven include: First- and Second-Class stamped and meter mail, Mailsort 1, 2 and 3 for bulk-mail services and Presstream 1 and 2 for delivery of newspapers and magazines.


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