Royal Mail blamed falling mail volumes, rising competition and higher pension fund costs for a 34 per cent drop in annual profit, but added its chief executive would collect 74 per cent of his performance related bonus.
State-owned Royal Mail, which lost its 350-year monopoly on postal services last year and recently faced strikes by workers, said revenue in its letter business was down 78 million pounds (US$162 million) in the first five months of the current year.
The group reported an operating profit of 233 million pounds for the 2006-2007 year, following a sharp rise in pension fund costs to 722 million pounds from 193 million, and said it expected to break even this year and next.
The company is making a desperate bid to modernise and is investing around4 billion pounds to compete.
The firm has plans to automate mail sorting and cut the workforce by around 40,000, or 27 per cent to fight competition from Business Post, Dutch mail company TNT, and others.
Royal Mail has also pointed the so-called“Google effect”, where firms focus their advertising on popular targeted websites and reduce the volume of direct mail to customers in an effort to reduce their carbon footprint.