Post by Taxigirl on Nov 13, 2003 9:45:55 GMT
Royal Mail has announced its first profit for five years.
The firm, recently hit by unofficial strikes which crippled deliveries, made a pre-tax profit of £3m for the six months to September.
In the same period last year, it had losses of £542m - but chairman Allan Leighton warned the firm had not yet achieved a full financial turnaround.
The profit, credited to a 1p rise in the price of stamps, does not include the estimated £40m cost of the strikes.
During the same six-month period last year, the company reported a trading loss of £147m, and when the costs of an ongoing shake-up were included, the loss amounted to £542m.
Royal Mail chief executive Adam Crozier said: "We now have to concentrate on the next six months, to make the changes that bring sustainable profit in the long-term.
"Unless we get ourselves into profit, and make ourselves fit to compete, then we won't have a future."
This year, the 1p increase in the price of stamps in May boosted revenue by £90m.
The Royal Mail's parcel delivery business Parcelforce, which has been in the red for years, is close to making a profit again.
'Can be profitable'
But BBC business correspondent Hugh Pym said the £3m pre-tax profit was "tiny", as the company did £4bn of business in the six months leading up to September.
And Ian Senior, of logistics specialists Triangle Management Services, said the profit was "not really enough, they have been losing billions in the previous five years".
He said: "An operation of this size should be making about £500m in profits."
Mr Leighton said it was "important" to be in profit again after years of losses.
He said: "It says that this is a company that can be profitable.
"We are half-way through a three-year turnaround programme, and are where we need to be at this point - but we have a long way to go."
Referring to the recent wildcat strikes which hit London and other parts of the country, he said: "The majority of our people did not want industrial action.
"But until we win the hearts and minds of all our staff we have not won the issue."
Productivity improvements, which were needed to pay for a 14.5% pay offer, had not yet been agreed, he said.
Billy Hayes, general secretary of the Communication Workers Union, said: "We are starting to turn the corner, which is really good news for the industry, but we want to see our members on 21st century conditions."
Working practices
The union has accused managers of exaggerating the financial plight of the company in order to force through unnecessary job cuts.
The Royal Mail is in the middle of a major restructuring aimed at restoring its fortunes.
It is shedding thousands of jobs and wants to push through changes in working practices which it says are essential if the business is to survive.
But it was anger at the way these changes were being enforced that led to the recent walkouts.
Tension still remains with the unions, despite the strikes having ended. Talks about pay and conditions are continuing at conciliation service Acas.