This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at http://www.theguardian.com/uk-news/2014/may/22/royal-mail-annual-profits-rise-competition-rivals

The article has changed 3 times. There is an RSS feed of changes available.

Version 0 Version 1
Royal Mail annual profits rise amid fierce competition from rivals Royal Mail shares fall 6.9% after competition warning
(about 2 hours later)
Royal Mail's annual profit rose more than 6% but the privatised postal service faces increased competition in its parcels business and a regulatory threat to its letters operation. Royal Mail's shares plunged after it warned it faced intense competition at its parcels business and that proposed expansion by a rival threatened the universal postal service.
Operating profit after one-off costs rose to £430m from £403m a year earlier on revenue up 2% to £9.46bn. In its first set of annual results since last year's flotation, the group announced a 13.3p dividend for the second half of the year. The company's shares fell 6.9% to 533p and were the biggest fallers in the FTSE 100 index.
Moya Greene, Royal Mail's chief executive, said: "Our performance was in line with our expectations. We are facing a couple of headwinds. The competitive environment on the parcels side is more intense. We are taking steps to remain the leader in this growing market.   The group made its warning as it posted annual operating profit before so-called transformation costs up 12% to £671m – and after transformation costs that fell to £430m – on revenue up 2% to £9.46bn. The group declared a 13.3p dividend for the second half of the year.
Announcing Royal Mail's first set of annual results since last year's flotation, its chief executive, Moya Greene, said: "Our performance was in line with our expectations. We are facing a couple of headwinds. The competitive environment on the parcels side is more intense. We are taking steps to remain the leader in this growing market.  
She added: "On the letters side, the headwind is direct delivery and we have strategies in place to counter its adverse financial impact. However, without timely regulatory action, direct delivery could undermine the economics of the universal service."She added: "On the letters side, the headwind is direct delivery and we have strategies in place to counter its adverse financial impact. However, without timely regulatory action, direct delivery could undermine the economics of the universal service."
Royal Mail's results will be closely watched after the government came under sustained attack for its handling of October's privatisation. Labour has accused business secretary Vince Cable of selling the shares too cheaply and letting City investors dictate the price. Royal Mail's results will be closely watched after the government came under sustained attack for its handling of October's privatisation. Labour has accused the business secretary, Vince Cable, of selling the shares too cheaply and letting City investors dictate the price.
But some analysts have warned that the near-70% rise in Royal Mail's share price since flotation has overlooked potential pressure on the business from competition and regulation.
Parcels revenue increased 7% to £3.16bn last year, more than making up for a 2% drop in letters revenue to £4.63bn.
Royal Mail's parcels business is its main area of growth as more internet shopping makes up for the decline in letters caused by email and social media. The company said it faced intense competition and was working to make its service more attractive to customers.Royal Mail's parcels business is its main area of growth as more internet shopping makes up for the decline in letters caused by email and social media. The company said it faced intense competition and was working to make its service more attractive to customers.
Royal Mail is in a dispute with TNT Post over how much Royal Mail charges its rival to deliver items already collected and sorted by TNT. The industry regulator Ofcom is investigating TNT's complaint. Royal Mail is opening 100 of its delivery offices on Sundays and will pilot Sunday deliveries within the M25 over the summer. It is also making it easier for customers to track parcels returned to the seller.
Royal Mail said that if TNT's demands were met it could cost Royal Mail more than £200m in revenue within three years and threaten the viability of providing the same service throughout the country. Royal Mail is in a dispute with TNT Post over how much Royal Mail charges its rival to deliver items already collected and sorted by TNT. The industry regulator Ofcom has put Royal Mail's proposed price changes on hold and is investigating TNT's complaint.
TNT is also planning to make direct deliveries in a number of cities that Royal Mail said would let it "cherry-pick" easily served locations while Royal Mail is required to provide the same quality of service throughout the country. Royal Mail said if TNT was allowed to go ahead with its plans it could cost Royal Mail more than £200m in revenue within three years and threaten the viability of Britain's universal postal service.