Page last updated at 15:21 GMT, Wednesday, 21 January 2009

Royal Mail in 20-year profit peak

Sign on York sorting office
The government has agreed that the Royal Mail should be part-privatised

All four Royal Mail businesses were profitable in the nine months to Christmas last year, for the first time in almost 20 years.

Royal Mail Letters, the Post Office, Parcelforce Worldwide and the European parcels business GLS contributed to an operating profit of 255m.

That nine-month figure compares with 162m for the whole of the previous financial year.

One of its rivals, Business Post, said it had taken a bigger market share.

The company, which picks up and sorts mail so that it can then be delivered by Royal Mail, said its share of that market had reached 15% in the last three months of 2008.

Companies such as Business Post have been growing steadily since the postal service was liberalised.

Part-privatisation

Despite the competition and reductions in mail volumes as a result of the use of e-mail, Royal Mail said it was on track to achieve annual profit of almost double last year's level.

Last month, the government accepted the recommendations of a report saying that the Royal Mail should be part-privatised.

The study by Richard Hooper said new minority owners could offer the "confidence, experience and capital" needed to carry out vital changes.

Describing the current Royal Mail as "untenable", the report added that the universal service was under threat without modernisation.

Royal Mail chief executive Adam Crozier confirmed that there would be a need to "access further investment in a timely and flexible way as we compete increasingly with electronic communications as well as with other postal operators, while at the same time dealing with the effects of the current economic recession".



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