By Neil Maidment
LONDON May 21 Britain's Royal Mail more than
doubled annual profit on the back of an online shopping boom,
providing a timely boost as it plans for a stock market listing
In a marked turnaround for a business that has been fighting
to adapt to a more competitive market and falling letter
volumes, Royal Mail reported adjusted operating profit of 403
million pounds ($613 million) in the year to March 31, against
152 million pounds a year earlier.
The increase reflected the impact of growing parcel volumes
fuelled by internet shopping, alongside price rises and cost
cuts after modernising its sorting operations. Parcel volumes
rose 9 percent to account for almost half of Royal Mail's
An initial public offering (IPO) is expected to value the
state-owned business at 2-3 billion pounds - Britain's biggest
privatisation for 20 years. Royal Mail has 150,000 staff and
annual sales of 9.15 billion pounds.
Momentum behind privatisation began gathering pace last year
after the European Commission cleared the government to take on
Royal Mail's hefty pension liabilities and regulators gave the
green light for the business to increase prices.
Despite fierce union opposition, Britain is pushing ahead
with plans to privatise the company this financial year to give
it access to external capital for future investment. It expects
to appoint lead bank advisers within weeks.
After Tuesday's results, Chief Executive Moya Greene said
that she had been meeting potential investors in Britain, the
United States and Canada.
"I'm speaking largely to long-only, high-quality investors
that would normally participate in an IPO of this scale;
investors like pension funds and mutual funds," she said. "I
would say the response has been positive."
A stock market listing remains the preferred option, but
ministers have said that a private sale could be an alternative.
This month business minister Michael Fallon said that
several overseas buyers had expressed "significant interest" in
buying the 497-year-old postal service, with Greene adding that
no route to new capital should be discounted.
"I think it would be foolhardy for anyone to rule out any
option at this time," she said.
The Communication Workers Union (CWU), which represents
120,000 Royal Mail employees, has been extremely vocal in its
opposition to privatisation, warning that the move could put the
firm's universal six-day-a-week service at risk.
Such a change, however, would also require a change in
In a statement on Tuesday the CWU said that Royal Mail's
positive results showed that it is making progress and that
privatisation is unnecessary.
Included in a sale would be a 10 percent stake reserved for
Royal Mail workers. Last Thursday the firm said it had hired
Equiniti to set up the employee share scheme.
European peers Austrian Post and Deutsche Post
both reported quarterly operating profit rises this
month, boosted by growth in parcel volumes and international