Royal Mail “delivering results” as profits increase 400% | Post & Parcel

Royal Mail “delivering results” as profits increase 400% | Post & Parcel.

400% increase in profits is no easy feat.  Very impressive.

But both the press release and the article in Post & Parcel clearly stipulate that while parcels, contributing 44% of the revenue, is a loss making operation at this time.

Royal Mail’s 2.2% operating profit margin, though a huge improvement from the 0.4% of the previous year, is still significantly lower than some competitors. (I am currently studying Yamato’s financial statements in detail and theirs indicate that their parcels operations bring in close to 5% operating profit margin.)

Of course no one can argue with Group CEO Moya Green when she says, “We recognise, however, that there is much more to be done.  Our commitment to executing our strategies is key. Our increased focus on the parcels market and our growing international businesses is helping to build a strong commercial future for the Group.”

And now the contrast between USPS, who continues to bleed money just by breathing, and Royal Mail Group will present an interesting comparison study going forward.  For Green to be able to say that RMG no longer has “going concern issues,” is a major step in removing one significant reason to keep the CEO up at night, no doubt.

The Post & Parcel article says that after a 30% retail price increase and 11% for business letters, revenue from parcels increased 10% while volumes went up by 6%. However, the article says, “Royal Mail said its parcel network was loss-making. The company is taking steps to reduce the losses, and said its cost allocation methodology for parcels was under review.”

While  automating letter sorting to delivery sequence increased from 8% two years ago to 75%, the 25% decline in letter traffic over six years means that this efficiency enhancement measure is merely plugging the bleeding a bit, rather than positively contributing to revenue and profit growth.  As such, clearly, ensuring that the growing parcels business turns around to become profit making is a priority focus for GLS.

For both competitors and alliance partners alike, how that will affect the way Royal Mail behaves in the other growth segment of international traffic will be of high interest.

 

 

SingPost faces $50,000 fine if letter targets are missed | Post & Parcel

SingPost faces tougher penalties if letter targets are missed | Post & Parcel.

 

From the current fine of $1,000 to $5,000, the Singapore regulator has upped the penalty to $50,000 per month per service category. The standards that need to be met are 99% next day delivery for letters posted within the CBD (Central Business District) by 3pm and 98% for those destined outside of the CBD.

 

Singapore is about 24km x 42km with a population of about 5 million residents.

 

It is also one of the handful of posts that have automated sorting to mailman’s delivery sequence with the 6-digit postal code.

 

According to Post & Parcel, “During 2011, SingPost achieved next working day delivery rates above 99.5% for items delivered inside the centre of Singapore, and above 99.1% for items going outside the centre.” Quite impressive and it looks as though SingPost doesn’t have to lose sleep over the new standards and high fines for the time being.

 

I recall from my Deutsche Post days a comment by then Chairman Dr. Klaus Zumwinkel that the German Post office was doing away with express mail delivery because 99% of letters are delivered the following day within Germany any way. And if Germany can do it with a significantly larger land mass and population, so should SingPost, I guess.