Royal Mail’s annual profits have more than doubled in the past year, with the increase in people shopping online leading to a strong growth in parcel deliveries.
Operating profits for the 52 weeks to the end of March jumped to £403m, up from £152m for the previous year.
Its core UK parcels and letters unit reported an operating profit of £294m, compared with just £33m last year. Parcel deliveries were up 13%, and now account for 48% of revenue across the group.
The rise in parcel deliveries is in marked contrast to a sharp fall in UK letter deliveries, which fell by 8%. Despite the fall, revenues rose by 3% due to the increase in stamp prices. Royal Mail said it was still the biggest overall parcel delivery player by revenue.
Moya Greene, chief executive, said: “We are well positioned to continue to benefit from the structural change to e-retailing, which is driving increases in parcel volumes, and to manage the decline in letters.”
The performance is expected to encourage the Government to cash in on the turnaround by pressing ahead with a privatisation this year, despite opposition from unions representing postal workers and managers.
The coalition aims to begin privatising Royal Mail this financial year, probably through a stock market flotation this autumn. Observers say the company could be worth between £2bn and £3bn.
The company said delivery and processing productivity had increased by 1.7 per cent across the core network. It closed nine mail centres in the year, taking the net reduction to 30 per cent since the modernisation process began three years ago.