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Royal Mail seeks letters and Post Office chiefs

LONDON - Royal Mail has axed the role of Post Office chief executive David Mills and is restructuring its management in an attempt to fend off competition from rival postal operators.

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The company said that it will shortly announce the appointment of two new managing directors -- for the Post Office and Royal Mail Letters.

While the Post Office was overseen by Mills, Royal Mail Letters fell under the jurisdiction of Adam Crozier, the group chief executive. Crozier will hand over control of the division to the new appointee, while Mills plans to leave the business at the end of this year.

Royal Mail explained that the changes were part of its strategy to "streamline its group structure to give its four businesses the best platform to meet the growing competitive challenges in their markets".

During his three-and-a-half years in the role, Mills was behind the transformation of the Post Office into a financial services provider.

Allan Leighton, Royal Mail chairman, said: "David has made a great contribution to the business and we wish him well. We now have the structure in place to take the group through the next stage of its development. Royal Mail has achieved a huge amount over the last three years, but we know there are more challenges to come in all our businesses over the next three to five years. I am confident that our people, and the management team we are putting in place, will continue to meet those challenges."

Royal Mail also announced its half-year results, recording a 20.5% increase in operating profit to £159m. However, the Post Office's overall revenue fell by £70m due to reduced payments revenue and it suffered an operating loss of £57m.

Royal Mail's letters business, which accounts for around 76% of the group's revenue, saw its operating profit fall 3% to £173m compared with the first six months of 2004. The fall came despite a 1.8% rise in postage prices from the beginning of April.

On a more positive note, Parcelforce Worldwide increased its external turnover by £10m and reduced its operating loss from £13m to £1m.

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