Post Office profits hit by e-mails

June 27, 2001

POST OFFICE bosses have blamed a rise in e-mail and text messages for crumbling profits. Consignia, as the company is now known, said last year's pre-tax profits had plunged 78% to ?103m, compared with ?474m the year before.

As more people choose to keep in touch by e-mail and mobile phone rather than writing letters, Consignia said it is seeing its margins drop. 'There is no doubt e-mail and phone messaging have had an impact. Communications are growing but our share is decreasing,' a spokesman said.

Mail volumes grew by just 2.7% against Consignia's estimate of 3.4%, reflecting 'increased competition' from technology.

However, wildcat strikes hit the post supply, as did the aftermath of the Hatfield rail crash, which caused a rail go-slow across the country. Around 62,000 days were lost to strikes last year - up 200% on 1999. The latest spate was the worst since 1996. After tax and one-off costs, profits fell to ?66m, which is ?88m below Government-agreed targets.

However, Consignia is still paying a ?93m dividend to the Government - its sole shareholder - which will anger those who want the money spent on the delivery service.

In 1999, the firm lost ?264m after tax and one-off costs but that was mainly due to the Government ordering the installation of a computer system, at a cost of ?571m.

Consumer groups dismissed any excuses and said it was time Post Office bosses resigned over the state of the business and service. Peter Carr, head of Postwatch, said: 'These results raise doubts about the viability of the business in its current form. There is little cause for celebration and it is always the customer who is asked to pay more.'

Consignia's delivery subsidiaries, Royal Mail and Parcelforce lost ?5m between them, compared with a ?28m profit the previous year, while Post Office Counters lost ?53m.