Royal Mail warns public service at risk without regulation

TNT Chief Executive Nick Wells has said that the Royal Mail should stop "sabre-rattling."

Speaking on BBC Radio 4's World At One, he said: "They have just delivered record profits. Clearly TNT Post are trying to create innovation in the postal market. We are delivering choice for our customers, and that is good for the market overall, as well as creating jobs.

"It is very fair. We are an entrant in this market and we will pay Royal Mail, for the areas we don't cover, a very fair and reflective price.

Royal Mail should stop this sabre-rattling. We have a small market share, there is absolutely no threat to the universal service."

More: Ofcom 'does not believe' there is any risk to sustainability to Royal Mail's deliveries

Competition fears triggered a big fall in Royal Mail shares today as the delivery firm failed to benefit from a sharp rise in annual operating profits.

Royal Mail shares were 5% lower, off 31.75p to 543p, after chief executive Moya Greene highlighted intense competition in the parcels market and warned about the impact that delivery rivals such as TNT will have on the economics of the Universal Service unless Ofcom intervenes.

More: Royal Mail reports profit of £671m

The Royal Mail has called for timely "regulatory action" to prevent the impact of direct delivery competition from undermining the economics of the Universal Service, after a challenge to the watchdog from delivery rival TNT.

Ofcom is investigating a complaint from TNT over Royal Mail's decision to change conditions and increase the prices it charges to deliver post collected and pre-sorted by its competitors.

Royal Mail chief executive Moya Greene said:"Royal Mail is required to deliver six days a week, overnight, throughout the whole country, to stringent quality standards and at a uniform, affordable tariff.

"Moreover, we are also required to deliver any items TNT Post UK does not consider economic to deliver itself. If TNT Post UK is successful in delivering its stated objectives, this could threaten the fundamental economics of the Universal Service."

More: Royal Mail reports profit of £671m

Parcel revenues have helped boost Royal Mail profits, the delivery service has announced today.

Parcel revenues increased by 7% but in volume terms the one billion items delivered in the period was flat compared with the previous financial year.

Addressed letter volumes declined by 4% but the trend improved over the year due to stronger economic conditions and one-off impacts such as energy companies writing to customers about price rises.

More: Royal Mail reports profits rise after privatisation

Newly-privatised Royal Mail has announced a 12 percent rise in full-year profit, but says its business is facing tough headwinds from increasing competition.

ITV News Business Editor Joel Hills reports:

The postal firm said operating profit before transformation costs rose to 671 million pounds in the year to March 30, in line with a company compiled consensus forecast.

Group revenue rose 2 percent to 9.46 billion pounds, with a 7 percent rise in parcel sales offsetting a 2 percent fall in UK letter sales.