By Marcus Leach

Royal Mail have cited falling mail volumes as one of the contributing factors to their subdued annual profits.

Figures released on Tuesday showed that operating profit, including modernisation costs, was down from £180 million in 2009 to £39 million in 2010.

The number of letters and parcels carried by Royal Mail last year fell by 4%, leading to a drop in revenues. Royal Mail hope that a series of job cuts and closures of mail centres will aid in reducing costs.

Currently undergoing a modernisation programme, which is said to be one of the biggest of its kind in the UK, Royal Mail spent £400 million in the last financial year.

Having already seen 5,500 staff leave last year as part of the modernisation process Royal Mail expects the number of mail centres to be reduced by half over the next five years.

Over the past five years, 45,000 jobs have gone from the UK letters and parcels business, reducing the total number of staff to about 163,000.

"Royal Mail has been in significant financial difficulty for a number of years," said chief executive Moya Greene.

"Our challenge is to put [it] on a sound, secure and sustainable footing."

Join us on
Follow @freshbusiness