Shropshire Star

Royal Mail has revealed the extent of its financial crisis as its regulated postal service made a £200 million loss last year, dragging profits down 30.4 per cent.

Overall, Royal Mail reported an operating profit of £162 million for the year ended March 30th 2008, a 30.4 per cent drop from last year.

The results showed the overall price controlled area of Royal Mail’s business made a loss of around £200 million.

Part of this division is the universal service that allows customers to pay the same price to post a letter from Land’s End to John O’Groats. But this may be under threat, as it lost Royal Mail £100 million over the last year.

The group also said it is handling three million fewer letters than last year as companies turn to cheaper rivals for their services.

In 2006, Royal Mail lost its monopoly on the right to collect and deliver mail. Although the organisation’s parcel delivery businesses GLS and Parcelforce Worldwide remain profitable, its universal delivery service is a drain on finances.

Adam Crozier, Royal Mail’s chief executive, said: “The universal service is a huge asset for Royal Mail and for the nation as a whole. It is part of the fabric of our society and is vitally important both to social cohesion and to the UK economy.”

Mr Crozier said there needs to be a real debate about how the service should be financed going forward.

Royal Mail also said it is still paying “huge sums” into its pension pot, contributing £800 million over the year.

The group is halfway through its plan to close up to 2,500 branches across the country in an effort to improve profitability.