Royal Mail profits fall by 30%

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The letters business recorded a loss of £3 million because of a sharp decline in mail volumes as well as the impact of competition in the postal industry. It was the first loss of its kind for a number of years.

The universal postal service under which letters are delivered anywhere in the UK for the same price lost £100 million according to the figures for the 2007/8 financial year.

The overall price controlled area of Royal Mail's business lost around £200 million.

The group's revenues increased over the year by 2.3% to £9.4 billion largely because of a rise in the parcels business.

The figures also revealed that the Post Office network is losing around £500,000 a day. Overall operating profits were down 30.4%

The financial results were published just days after an independent review reported that competition had not delivered positive results for consumers and smaller firms.

Adam Crozier, the Royal Mail's chief executive, said: "The £162 million operating profit is a robust financial performance, ahead of expectations, in a year when we faced many difficult challenges.

"But we secured a landmark agreement on modernisation and pensions and are pressing ahead with the vital investment in and modernisation of Royal Mail letters to ensure it competes successfully in a market where volumes are falling and competitive pressures are increasing,"

The Royal Mail said its results were dominated by the profit fall in its letters business where market volumes have declined by 3.2% over the past year.