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Royal Mail's half-year profit falls 25 percent as costs weigh

Royal Mail's half-year profit falls 25 percent as costs weigh
Royal Mail vans are parked in the Leytonstone post office depot in London, Britain early July 6, 2017. REUTERS/Russell Boyce   -   Copyright  Russell Boyce(Reuters)
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(Reuters) – Royal Mail Plc’s <RMG.L> first-half profit dropped about 25 percent as the post and parcels company failed to cut enough costs in the UK and margins came under pressure at its fast-growing European business.

The company also said it was reviewing its organisational structure and management roles, discretionary spending and central cost, after it warned last month of a 21-28 percent fall in full-year profit and said it was implementing cost cuts.

The former British postal monopoly reiterated on Thursday its expectations to cut costs by 100 million pounds in the full year and maintained its adjusted operating profit forecast of 500-550 million pounds.

Royal Mail has been struggling to stem falling letter volumes in the era of emails and mobile phones, and more recently warned that the new European data privacy law could reduce traditional marketing mail.

The company shuffled its management this year, with Rico Back replacing Moya Green as CEO and Les Owen succeeding Peter Long as chairman. Keith Williams, who was the chair of the audit & risk committee, was named deputy chairman in November.

Adjusted operating profit before transformation costs fell to 242 million pounds ($314.9 million) in the half year ended Sept. 24, from 323 million pounds a year earlier.

($1 = 0.7685 pounds)

(Reporting by Tanishaa Nadkar and Arathy S Nair in Bengaluru; Editing by Gopakumar Warrier and Saumyadeb Chakrabarty)

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