Profit hopes at Royal Mail pave way for float

Michael Bow
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ROYAL Mail Group is expected to post a bumper set of profits tomorrow led by strong growth in its parcel delivery business – opening the door for a possible float of the state-owned business by government next year.

The postal group, which increased operating profit after costs to £211m last year from £39m the year previously under chief executive Moya Greene, is set to march further into the black when it delivers profits for April-September 2012 tomorrow. The healthier balance sheet has encouraged the government to test the water with City banks and investors about a possible float, with the shareholder executive gearing up to consult institutions about plans.

It is understood the group’s UK Parcels, International and Letters division will lead the profit increase, after booming demand from online retailers such as Amazon and Asos for delivery services offset a drop in its letter delivery service.

Last year the division made a £23m profit last year, up from a £120m loss the year previously.

The government has already quietly started sounding out City investors about their interest in a potential public offering of shares in the company, according to a report over the weekend from Sky News’ Mark Kleinman.

A source said last night: “Royal Mail is going to be sustainable if you look at their full year results. In previous years it had been in the red. What everyone will be looking for is the sustainability of profits.”