Royal Mail announces profit increase but all is not well
The Royal Mail has today announced half-year figures showing a rise of £7 million to profits of £184 million for the six month period. This comes despite the fact that revenue for the overall business has fallen by 1.5% and competition, as well as industrial action, is set to hit future income and future profitability. But there is more beneath the surface which needs to be addressed!
It was also revealed that the Royal Mail pension scheme now has a deficit which is approaching £10 billion and needs to be addressed as soon as possible. More alarming is the fact that the deficit would appear to have increased from £3.4 billion at the last valuation date to an expected £10 billion in January 2010 with very little in the way of action taken to rectify the situation. The company is haemorrhaging cash and the ongoing clashes with the unions are certain to have an impact on the long-term profitability of the operation and its image within the marketplace.
There needs to be a total revamp of the Royal Mail as soon as possible, something which could see the group split up with the more profitable parts potentially sold on or floated on the stock market to raise money for the government. The future of the Royal Mail is still very much in the balance.
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