Britain’s Royal Mail is expected to announce plans tomorrow for an IPO next year that could raiseup to £2 billion as its financial results continue to improve.
The Sunday Times newspaper reported at the weekend that the UK postal operator is set tounveil a sharp jump in 2012-13 half-year profits on Tuesday. These could pave the way for aflotation next year that might raise up to £2 billion for the government from the privatisation.
Royal Mail will need to convince potential investors that its core letters & parcelsbusiness is firmly back on track in financial terms and has sustainable profits, it wrote. Aninvestors’ roadshow has already been cleared. UK media speculated today that better parcel results,driven by e-commerce, will be the key factor in the profits improvement.
In the year ending March 2012, Royal Mail’s revenues increased four per cent to £9.5 billionand the operating profit after modernisation costs rose to £211 million from last year’s £39million, improving the operating profit margin to 2.2 per cent from 0.4 per cent in the previousyear.
The core business, UK Parcels, International and Letters (UKPIL) returned to the black withan operating profit after modernisation costs of £23 million compared to a loss of £120 million in2011. GLS, the continental European parcels business, increased revenues by five per cent to £1.6billion and improved profits slightly to £128 million, giving it an 8.2 per cent profit margin.
Last month CEO Moya Greene announced a £75 million (€93 million), four-year investmentprogramme for the UK express parcels business, Parcelforce Worldwide (PFW), as part of the group’sstrategy to expand its parcels businesses in the UK and overseas to take advantage of the growth ine-commerce. The investment covers a new hub, more than a dozen new or expanded depots and about1,000 new jobs.
