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Royal Mail operating profit up 4% Royal Mail operating profit up 4%
(about 1 hour later)
Royal Mail has reported an operating profit of £184m for the six months to September, up 4% from a year ago.Royal Mail has reported an operating profit of £184m for the six months to September, up 4% from a year ago.
But the company also announced that it had paid more than £300m into its pension fund over the period.But the company also announced that it had paid more than £300m into its pension fund over the period.
It said its pension fund deficit was being revalued and was expected to reach £10bn, compared with £3.4bn at the last valuation three years ago.It said its pension fund deficit was being revalued and was expected to reach £10bn, compared with £3.4bn at the last valuation three years ago.
Revenues for the half-year fell £73m to £4.58bn, hit by the continuing decline in mail volumes and the recession.Revenues for the half-year fell £73m to £4.58bn, hit by the continuing decline in mail volumes and the recession.
Royal Mail said its letters business had seen volumes fall to 72 million items a day, down by three million from last year.Royal Mail said its letters business had seen volumes fall to 72 million items a day, down by three million from last year.
Employment costs were £170m lower than in the same period last year. Royal Mail says that 60,000 people have left the group since 2002, with 5,000 job losses in the six months to September.Employment costs were £170m lower than in the same period last year. Royal Mail says that 60,000 people have left the group since 2002, with 5,000 job losses in the six months to September.
Profits were made in all four businesses within the Royal Mail group: the Post Office, Royal Mail Letters, Parcelforce Worldwide, and its European parcels business GLS.Profits were made in all four businesses within the Royal Mail group: the Post Office, Royal Mail Letters, Parcelforce Worldwide, and its European parcels business GLS.
Driving efficiencyDriving efficiency
Royal Mail said the rise in operating profits was an indication that the modernisation of its letters business was working.Royal Mail said the rise in operating profits was an indication that the modernisation of its letters business was working.
"Everyone working the hours for which they are paid, working flexibly and using new equipment we're investing in... have helped drive efficiency and offset the effects of volume decline," said Royal Mail chief executive Adam Crozier."Everyone working the hours for which they are paid, working flexibly and using new equipment we're investing in... have helped drive efficiency and offset the effects of volume decline," said Royal Mail chief executive Adam Crozier.
Royal Mail says it is two-thirds through the implementation of its plans, the details of which sparked a number of strikes earlier this year.Royal Mail says it is two-thirds through the implementation of its plans, the details of which sparked a number of strikes earlier this year.
The plans, which will cost a total of £2bn, include:The plans, which will cost a total of £2bn, include:
  • the roll out of walk sequencing machines which sort the mail for a route
  • the installation of large flat sorters which sort larger items such as catalogues and magazines
  • more "intelligent" letter sorting machines which sort mail faster and more efficiently
  • the roll out of walk sequencing machines which sort the mail for a route
  • the installation of large flat sorters which sort larger items such as catalogues and magazines
  • more "intelligent" letter sorting machines which sort mail faster and more efficiently
'Pay freeze'
Commenting on the figures, the Communication Workers Union (CWU) said the hard work of its members should be recognised by Royal Mail bosses.Commenting on the figures, the Communication Workers Union (CWU) said the hard work of its members should be recognised by Royal Mail bosses.
"We believe postal workers deserve to be rewarded for the success they have brought to this change process. A pay freeze is no way to thank staff who have seen colleagues leave and workloads rise," said CWU deputy general secretary Dave Ward."We believe postal workers deserve to be rewarded for the success they have brought to this change process. A pay freeze is no way to thank staff who have seen colleagues leave and workloads rise," said CWU deputy general secretary Dave Ward.
The Department for Business is urging the CWU and Royal Mail to work together to resolve the issues that led to five 24-hour walk-outs by union members earlier in the year.The Department for Business is urging the CWU and Royal Mail to work together to resolve the issues that led to five 24-hour walk-outs by union members earlier in the year.
"The figures show that a successful outcome to the current modernisation talks between the management and the unions is vital to Royal Mail's future," the department said."The figures show that a successful outcome to the current modernisation talks between the management and the unions is vital to Royal Mail's future," the department said.
Liberal Democrat business spokesman John Thurso urged Royal Mail to remember that it still had pressing concerns to deal with.
"Any improvement in profitability is welcome, but Royal Mail still faces many structural problems, including a decline in its core business and a pension deficit that has now topped £10bn."