Anger as Royal Mail profits soar

Royal Mail has reported a huge increase in half-yearly profits, sparking fresh controversy over plans to privatise the postal group.

Operating profits in the six months to September were £144 million, compared with £12 million in the same period last year, as growth in parcel deliveries made up for a continued fall in the number of letters being sent.

Unions said the news showed that modernisation of the Royal Mail can be successful within the public sector.

Royal Mail chief executive Moya Greene said the timing of the privatisation was a matter for the Government, but she believed the organisation could not generate the investment it needed by itself.

The group said in its interim report that preparations are under way for the sale of Royal Mail. "Obtaining external capital is a key part of the transformation process as we become a more parcels-focused business and make the investment in technology to do so," said the report.

The Government is planning to sell or float the Royal Mail - but not the Post Office arm of the business - probably at the end of next year, despite opposition from unions representing postal workers and managers.

Ms Greene said Royal Mail was climbing out of a "very deep hole", with all parts of the business now profitable. She highlighted the turnaround in the UK parcels, international and letters business (UKPIL), where a loss of £41 million in the half year to last September has been converted into a profit of £99 million.

"Royal Mail has experienced the negative impact of e-substitution, which is driving the structural decline in the traditional letters market. Conversely, we are seeing the positive impact that online retailing is having on our parcel volumes," she said.

Dave Ward, deputy general secretary of the Communication Workers Union, said: "There is no need for privatisation as a solution to business transformation. Change is being successfully delivered by postal workers daily throughout the company.

"Royal Mail is doing its bit to change, but the regulator must now step in to protect the universal service. Competition from private companies is undermining Royal Mail's ability to provide an affordable service to every part of the UK."