A failure to modernise and an increase in pension fund costs are among the reasons for Royal Mail's (RM) £122 million fall in annual profits, the group has said.
Announcing its results for the year ending March 25th 2007, RM blamed a "significant increase" in pension costs of £193 million for overall profits slipping to £233 million in 2006/07.
The company, which was forced to rely heavily on its European operations and government funding, said it would have to raise its retirement age from 60 to 65 as part of a series of measures revising its pensions scheme.
It said it was 40 per cent less efficient than its rivals and was suffering from a declining market, making it imperative that it modernise and improve its performance.
"Looking to the future, if we are to continue on our journey to become the world's best and most trusted postal service we must now take action to meet the challenges of securing a viable pension scheme for our people, dealing with the impact of both substantially increased competition and falling mail volumes, and building a long term sustainable post office network," a joint statement from chairman Allan Leighton and chief executive Adam Crozier said.
"We continue to make progress with much-needed changes to our operations, but we must move faster and further and we know the importance of bringing our people with us as we transform the company."
The first months of RM's 2007/08 financial year, which have seen crippling strikes affect its UK operations as workers oppose the proposed changes, appear to show little respite for RM's bosses.
In the five months to August revenues in the letters business fell by £78 million when compared with figures in the same period last year.
Digg 
Delicious 
Reddit 
StumbleUpon 
Google 
Technorati 
Netvouz