£255m profits boost for Royal Mail

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Despite the economic downturn and further falls in mail volumes driven by increased use of emails, group revenue increased by almost 3% during the first nine months of the current financial year to £7.2 billion.

The company made an operating profit of £255 million in the nine months to Christmas, compared with £162 million for the whole of 2007/8.

The Royal Mail said it was on track for an annual profit of nearly double the level it achieved in the last financial year.

Royal Mail chairman Allan Leighton said: "The company and its people have come a long way in just six years when Royal Mail was losing more than £1 million a day and routinely failing quality of service targets.

"A huge amount has been done to put the business on a stable footing - something many believed was not possible - and, having established a firm base on which to build for the future, we are getting on with our modernisation plans and catching up on decades of under-investment."

Chief executive Adam Crozier added: "Royal Mail's modernisation plan agreed with our shareholder, the Government, is on track to deliver across the period of the plan, with more than £600 million spent on transforming the letters business since the investment plan was agreed in 2006-2007.

"We have plans in place to spend every penny of the £1.2 billion commercial loan agreed by the Government in 2007 over the plan's lifespan to 2011, which will clearly help us to improve efficiency and deliver even better service for our customers.

"There will be a need, however, to access further investment in a timely and flexible way as we compete increasingly with electronic communications as well as with other postal operators, while at the same time dealing with the effects of the current economic recession."