Royal Mail rivals ready to buy into Parte[force
Page 6
If you've noticed an error in this article please click here to report it so we can fix it.
CM COVER STORY
joanna.bourkefarbi.co.uk ROYAL MAIL GROUP'S rivals are likely to snap up parts of Parcelforce after the government confirmed it will be privatised.
A new Postal Services Bill will be introduced in the House of Commons by the end of the year, which could see the group split up and parts sold off.
Ivor Skinner. MD at APC Overnight, tells CM: -We arc not adverse to acquisitions. and as a company which has one of the largest courier depot coverages in the UK. we definitely see the sale of Parcelforce as an opportunity as I expect our competitors will too."
In May, Parcelforce revealed that its turnover had remained static at £399m but operating profit had risen 41.7"k to £17m (from £12m) during the 12 months to 31 March. However, Royal Mail continued to see a decline in letter volumes.
Independent postal economist, Ian Senior, says: "The fact that Parcelforce is profitable and has such a wide customer base is going to be attractive to many parcel carriers."
Yodel declined to comment on the sale, while Hermes, UK Mail and City Link were not available.
However, Senior adds: "I don't believe Royal Mail is a tempting prospect because of its increasing pension deficit and the fact that final-mile deliveries require a large amount of staff This coupled with the fact the value and quantity of mall is declining is not attractive."
Last July, TNT formally withdrew from the process of forming a strategic partnership with Royal Mail. TNT says it has other priori ties that include the intention to separate its mail and express businesses in 2011.
Senior believes industrial action by the Communication Workers Union is inevitable as and when privatisation progresses: "This will only weaken the public's confidence in Royal Mail, pushing its turnover down more, and forcing them to look for alternatives:' A Royal Mail spokesman says: "While we're getting on with mod ernising the company as fast as our capital permits, Royal Mail needs a way of getting access to capital, a resolution of the legacy £10.3bn pension deficit."
He says "a strikingly different regulatory approach" is needed for Royal Mail to "compete fairly in an increasingly tough and shrinking marker.