Royal Mail finances rated better than rivals

[TrueBlueTerrier]

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Royal Mail has been given a cleaner bill of financial health than any of the world’s post or parcels companies, giving a boost to the government’s hopes for a successful flotation in the next few weeks.

Rapid Ratings, an independent US-based rating company, said Royal Mail had “changed dramatically” in the past two years and ranked it above even its most successful peers such as Deutsche Post DHL and Austria Post on a range of indicators.


The government is due shortly to publish the sale prospectus, having announced its intention to dispose of a majority of the company, including a 10 per cent stake to be given to its 150,000 workers.

That means at least 41 per cent of Royal Mail will be floated on the London Stock Exchange, though the figure could be higher. The company is thought to be worth up to £3bn. It is the most ambitious privatisation since the railways were sold off in the 1990s.

Royal Mail faces a wave of rolling strikes by the main union, the Communication Workers Union, which is due to ballot members on pay, pensions and job security. The result is due on October 16, with strikes possible from October 23.

Rapid Ratings assessed Royal Mail’s financial health as better than its peer group on five out of six broad criteria: sales performance, working capital efficiency, cost structure efficiency, debt service management and overall profitability.

It is an endorsement of the improvement since Moya Greene, its Canadian chief executive, joined in 2010. Pre-tax profit rose 60 per cent to £324m in the past year, whereas two years ago it was losing money in its UK post and parcels operation.

Under Rapid Ratings’ system, Royal Mail gets an overall rating of 86 out of 100, ahead of Austria Post on 85, Deutsche Post DHL and Singapore Post on 79 and FedEx on 74.

Royal Mail’s rating has risen from just 36 two years ago. “This is a company that has changed dramatically in the past two to three years,” said James Gellert, the ratings company’s chief executive.

Despite the findings, Royal Mail executives acknowledge that the company remains years behind Deutsche Post in operating efficiency and needs to invest in technology as it reshapes itself to focus on parcels, to take advantage of online shopping.

Mr Gellert said a strong financial health rating meant Royal Mail was “better placed to withstand a shock or bump in the road” as it stepped up investment.

Rapid Ratings is paid by subscribers rather than by the companies rated. It calculates its ratings using 60 ratios drawn from financial statements.

[UnhappyGremlin]

First off, suspiciously (not) timed press release.

Second, if true, and I believe it is, ( in my opinion, RM's 'financial woes' are/have never been as bad as claimed), why the need to privatise? Why the need for 'outside investment'?

Because it's all lies. Privatisation has nothing to do with investment. It's about the Governments mates lining their pockets. As per usual.

[barbario]

And ,of course,the sale of land and property might have something to do with it.It would be interesting to know if these sales have gone towards operating profits to make it look like we are doing better than we actually are.