Royal Mail reports fall in profits

PROFITS at state-owned postal service Royal Mail tumbled in the first half, highlighting the mammoth task the government will face in finding a trade buyer or completing a flotation.

In the six months to the end of September, operating profit plunged by 72 per cent to £52m, against £184m a year earlier,as falling mail volumes, stiff competition, and the inexorable rise of electronic communication took their toll. Revenues tumbled from £4.6bn to £4.4bn.

Vince Cable, the business secretary, recently unveiled plans to privatise 90 per cent of Royal Mail, either through a flotation or trade sale.

Trova Consulting, an advisory firm commissioned to value to postal service, said it could be worth as little as £700m. Possible trade buyers include dutch rival TNT and Deutsche Post.