£2bn postal sell-off on the cards

A £2bn sell-off of Royal Mail is being pencilled in for the third quarter of 2013, with the company’s latest results – to be released on Tuesday – likely to show it has turned the corner in its recovery programme.
Officials working on the sale say tomorrow’s figures are the crucial test of whether the postal operator will be ready for a float.
According to reports over the weekend, the Government is so confident that it has already sanctioned a roadshow of prospective investors after Christmas.
The parcels, international and letters unit (PIL) has historically dragged down Royal Mail’s performance, turning over more than £7bn a year but losing money. Last year it made a return to the black – showing a profit of £23m – but is expected to have shown greater improvement over the past six months.
The recovery has been driven by an increase in parcels business from online retailers. Amazon is now Royal Mail’s biggest customer. The boom has already led to the creation of 1,000 new jobs and a £75m investment over the next four years.
And, last week the company announced it was opening eight temporary parcel sorting centres from this week to help cope with surging parcel volumes during the run-up to Christmas.
“That is the absolute key to the privatisation,” one banker involved in the process told The Sunday Times. “If Royal Mail can show that the core business has turned the corner and has become attractive to private investors, we are on track for the sale.”
It is believed the results will come too early to see any progress made in its direct mail business division, which was recently relaunched as MarketReach.
Formerly, the Mail Media Centre, MarketReach is designed to win back share from digital channels, by offering clients enhanced media planning, data planning and creative services. It is now headed up by former agency chief Jonathan Harman.

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