Pressures to compete in a rapidly changing UK postal landscape has spurred Royal Mail (RMG) into spending big on modernising operations and streamlining its workforce. Strip out these transformation costs, which include the axing of 3,000 staff, and half-year operating profit fell 2 per cent to £342m.
While that was broadly in line with expectations, investors reacted to the latest update on the UK's national postal service's efficiency drive by sending the shares up 5 per cent. The company will have to spend at least £180m over the full financial year to achieve its target of knocking £500m of annualised costs by 2018. But progress is apparent: excluding the transformation spend, 2016 full-year underlying operating costs in the core business are expected to come in at least 1 per cent lower.