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Last Updated: Thursday, 27 May, 2004, 14:54 GMT 15:54 UK
Royal Mail unveils £220m profits
Letter
Many first-class letters are arriving late
The Royal Mail has unveiled a healthy annual operating profit, reversing several years of steep losses.

The service made a profit of £220m ($400m) for the full financial year, up from a loss of almost £200m last year.

The turnaround reflects tough cost-cutting measures, including large-scale job losses and a programme of post office closures.

But, the financial recovery was marred by the fact it missed all 15 delivery targets as late deliveries increased.

Royal Mail aims to deliver 92.5% of first class letters on the day after they were posted, but has undershot the target.

Industry regulator Postcomm said it would investigate the reasons for "the recent collapse in Royal Mail's quality of service". Royal Mail is now due to make compensation payments of about £80m - on top of any penalties that Postcomm could impose.

'Not good enough'

In the year to March, 90.1% of first class mail was delivered the next day. Meanwhile, 97.8% of second class mail arrived on time, just below a target of 98.5%.

Chairman Allan Leighton said: "That is not good enough.

"We will ensure the problems are fixed as quickly as possible."

BEST AREAS FOR 1ST CLASS DELIVERIES
Huddersfield - 94.8% arrive next day
Lincoln - 94.3%
Sheffield - 94.2%
Sunderland - 93.9%
Bolton - 93.9%
Source: Royal Mail
Mr Leighton is to defer his annual bonus, worth some £144,000, until the group meets its targets.

The Mail's chief executive, Adam Crozier, and five other senior directors are also set to waive a proportion of their annual bonuses.

Mr Crozier will waive the quality of service aspect of his bonus which is worth tens of thousands of pounds.

The group blamed unofficial action by postal workers last autumn for missing its delivery targets.

Strike hit

"Without it, we would have reported quality of service levels higher than at the beginning of the renewal plan as well as an even higher profit number," Mr Leighton said.

YOU ASKED POSTWATCH
You put your questions to Postwatch Chairman, Peter Carr in an interactive forum.


"In deferring our bonuses we are saying we have confidence in everyone in Royal Mail achieving our key targets by the end of this current year."

He also argued that the unofficial strikes - sparked by a shake-up of services, including the switch to a single daily delivery - had meant that Royal Mail had no realistic chance of hitting its targets.

But, he added: "Making a profit however is a major step forward especially when Royal Mail was losing well over £1m a day from its operations barely two years ago and allows us to invest in our company and in our people's pensions and pay.

WORST AREAS FOR 1ST CLASS DELIVERIES
Northamptonshire - 74.3%
London, south west - 82.1%
London, south east - 84.4%
London, west - 84.6%
Harrow - 84.8%
Source: Royal Mail
He remained unrepentant about the radical shake-up at the company saying: "The amount of change is probably more than any other business in the last 20 years."

But as a result of the delivery, route and staff alterations the product quality of service and morale among workers had all improved, he added.

"There is a turnaround in sight but we've still got a lot to do and this year is pretty pivotal," he said.

Other figures released showed Parcel Force Worldwide had halved its losses to £102m from £198m last time.

Looking ahead, Mr Leighton warned the company will be facing increased competition.

Radical changes

He also said it was not safe to assume that future growth would drive up profits as price caps imposed by the regulator mean that postage prices are falling in real terms.

Mr Leighton warned that competitors will soon enter the market who will have much more cash to plough into their operations.

The company is still only making returns of 2% "while the Dutch and Germans who are going to move in are going to make 20% plus".

Royal Mail also said it had upped its pension fund contribution to £270m, adding that it was vital that a £400m profit was reached as this would trigger an £800 payment to every worker.

Chief executive Adam Crozier said: "Only a radically changed company can deliver this profit."

Since the company launched its renewal plan in 2002, 27,100 staff have left the company - 5,000 more are expected to leave by September.


What are your experiences with Royal Mail deliveries? Has your business been affected? Have you switched to e-mail or alternative mail carriers? Or is the service still value for money?

Your comments so far:

It does worry me greatly when I get home from work to see a few young people in Royal Mail vests (covering up a hooded top - i.e. not Royal Mail uniform) delivering the mail in the area as I'm pulling up... at gone 4pm! How could somebody who worked from home or ran a business from home survive when they have absolutely no idea when the mail could turn up? It beggars belief if you ask me.
Darren, Reading

The service provided to our house has deteriorated tremendously in the three years since we moved in. Post now regularly arrives after lunch, and parcels are often just dumped on the door step and left if they won't fit through the letter box. If a viable alternative was available I'd use it, we already use e-mail and fax extensively instead of writing, not because of the cost of stamps, which are still pretty reasonable all things considered - but because with an e-mail there is a much better chance of it arriving safely and in a timely manner!
Mark, Cardiff, Wales

I have complained about the state of the mail through my door. It is often ripped, bent, crushed or folded in half (even with 'do not bend' mail). The delivery manager unbelievably sent the postman to our house who was very confrontational with my wife. He blamed the pressures placed on him to delivery quickly. Of course no apology was given... and we still get damaged mail. Having watched him try to shove the mail through the door one-handed, it would be quicker if he took his time and did it properly.
Dave L, Bristol, South Glos

Royal Mail are one of the most inept companies I've ever had to deal with. I had my mobile phone stolen when it was supposed to be delivered back to O2 for replacement, even though I sent it recorded delivery. When I attempted to find out what had happened to it, I received a very unhelpful email claiming it probably had been delivered, but that they had no record of this. They just put the blame elsewhere and ignored the problem. We've also had Christmas cards delivered ripped open, along with a note saying "it fell down the back of some machinery". Strange how this never happens to my bills...
Phil, London, UK

My family recently sent me a parcel (first class) from the UK and it took nearly a month to arrive. A UK magazine I subscribe to monthly and orders from Amazon.co.uk are always a couple of weeks late. Compared to parcels shipped from the US, which are always delivered on-time, the Royal Mail seems to be very slack.
Christian, Lyon, France

I am a very disappointed and angry customer, still waiting for a parcel posted on 19/05/04 by First Class mail and lots of mail. I am regularly receiving other people's mail and having parcels left outside of my door at small council estate
Andrea Procter, London

We need to take a dinosaur into the 21st century and that was never going to be easy, but don't knock us for trying
Whilst Royal Mail seems to be the target of the press at the moment, and is not in dispute that a company of Royal Mail's size needs to change to upgrade its services for staff and the consumers, the enormity of the change and lack of investment from the government over the years, means this task has to be completed in a market place allowing in competitors on different playing fields, and in such a remarkebly short period of time. Any other company would have caved in under the task long ago. But no we believe in the changes, are fighting to keep the customers' expectations realistic... We need to take a dinosaur into the 21st century and that was never going to be easy, but don't knock us for trying. Although we have problems they will be resolved, bear with us and give us the chance to prove it!
anon, Peterborough

We regularly use Recorded Delivery, sometimes up to half a dozen items a day, and an alarming number of these simply disappear without a trace. Our business is affected by the mail not reaching the addressee promptly, by having to redo the work, and by the time and effort involved in sending claim forms to Royal Mail and liaising with Postwatch. Until I complained about the repetitive correspondence, Royal Mail Customer Service responses consisted largely of standard letters. Many delivery staff I suspect are not even aware of the requirement to get Recorded Delivery items signed for and they are therefore delivered along with the ordinary mail, despite the considerable extra postage charged.
Steve, crawley, uk

At 30p (in euros about 45 cents) a go for first class Royal Mail represents real value for money. In Germany the price is 55 cents and in Spain, where I currently live, the price is 52 cents). The prices we pay are in reality too low but at the end of the day, who would rather scrap second class and add 8p to the price of a stamp just so that we can have 92.5% next day delivery instead of 90%. Who cares? I sure don't. Keep up the good work Royal Mail and keep your prices low.
Daniel Meadowcroft, Castellón

I work for Royal Mail Group and would like to point out that we "Royal Mail" are being pushed and pulled in various directions by PostComm, The CWU and CMA, The Government and various other organisations. Whilst we all know that there is room for improvement this will not happen until the unions are dealt with head on. They are crippling the company and if it continues we will be facing another Rover. We have a inflexible workforce who are still living in the days of the horse carriage........
Mickijuana, Birmingham

The Royal Mail is in a shambles. Many businesses in our area, London E1 received no mail during the first two weeks of May, since then it has trickled through. We are certain that a substantial amount of mail has either been destroyed or is in storage somewhere.

One delivery a day is fine, but this change has been thoroughly mismanaged from the top. Mr Crozier should go back to playing football and the Royal Mail should install a manager with logistics skills at the top. If the Royal Mail paid compensation, there would be no profit to report
David Cargill, London E1

Our old postman had delivered our mail for the past few years was very friendly and efficient. He has been taken off the round and replaced by teenagers. The only way you know they are postmen is by the mail sack they are carrying. We have no post for days and then a pile all at once. The teenagers don't appear to know what they are doing. Last week I saw one of them walk up and down our cul de sac four times delivering mail in the space of an hour. I went round the corner to the shops and found him squatting down by some garages sorting his round out in the street. In Harrow my father in law had to collect a registered letter from the post office. The card advising him to collect the mail appeared to have been pre-prepared and in the middle of a pile of letters with a rubber band around it, indicating that the postmen had no intention of delivering the registered letter in the proper manner. Something radical has to be done to organise the mail back into an effective and efficient manner and to win back the public's confidence
Stephen Nelson, Benfleet, Essex

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WATCH AND LISTEN
The BBC's Rory Cellan-Jones
"For too many customers... the service just isn't up to scratch"



SEE ALSO:
Royal Mail urges pricing shake-up
27 Apr 04  |  Business
Royal Mail raises UK stamp prices
31 Mar 04  |  Business
Royal Mail cracks down on bullies
09 Dec 03  |  Business
Royal Mail sorry for snail mail
25 Apr 04  |  Business


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