Mail earnings up but letters still lose money

The state-owned postal operator, which the government is hoping to privatise, lifted operating profit to £67m from £22m the year before.

Moya Greene, CEO, said yesterday: “The necessary measures we implemented earlier in the year – increasing our prices and tight cost control – are a key part of our strategy to return Royal Mail to sustained financial viability.

“They are beginning to deliver results. But we have a great deal to do.”

Royal Mail, which delivers around 59 million items every day to 29 million British addresses, said operating losses on letters and parcels fell to £41m in the six months to September 25 from £55m the year before.

The improvement partly reflected a rise in the price of a first class postage stamp to 46p from 41p.

The loss was offset by a £58m profit from Royal Mail’s European and British express parcel service GLS and a £55m profit from its post office branch network.

Under a major programme of job cuts, Royal Mail shed over 5,000 workers in the past 12 months, including almost 2,000 in its head office and other managerial roles.

Royal Mail said trading conditions would remain challenging and it would explore more cost cuts while remaining committed to deliveries every day except Sunday.

Industry regulator Ofcom has proposed that Royal Mail, which made a £120m loss on its letters business last year, will be able to charge as much as it wants in the future for first-class stamps.