By Arathy S Nair
(Reuters) - Britain's Royal Mail (LON:RMG) Plc has chosen the boss of its fast-growing European parcels business, Rico Back, to succeed Chief Executive Officer Moya Greene, who will retire after eight years in charge.
Back is CEO of General Logistics Systems (GLS), an Amsterdam-headquartered business that has offset declining post and parcel volumes in Royal Mail's home market.
Under Greene, one of only seven female CEOs in the FTSE 100 list of top companies, Royal Mail was privatised in 2013 and has since reduced layers of management, upgraded technology and cut its property bill to save costs.
The company has faced labour disputes and in February reached an agreement with the Communications Workers Union (CWU) to end a nearly 10-month dispute over plans to replace the company's defined benefit pension scheme.
"When Moya joined in the summer of 2010, the company was balance sheet insolvent. Since then, Royal Mail has been transformed, including our privatisation in 2013 and two significant, ground-breaking agreements with the CWU," Chairman Peter Long said.
Back will take over June 1 with challenges including competition in its domestic parcels business and falling letter volumes.
He was a founding member of German Parcel in 1989, which Royal Mail bought 10 years later and rebranded as GLS.
"GLS will continue to be the engine for growth. What Rico has built in 42 different markets is ... exceptional and we want to see that go forward now," Greene said.
The company has been investing in GLS to expand into new geographies and increase its revenue share from outside UK. GLS' revenue grew about 9 percent in the year ended March 2017 and contributed about 22 percent of group revenue.
Bernstein analysts said Back was a "natural successor" given his 30 years of experience in the parcels business.
The company also named Sue Whalley as CEO of the UK Post and Parcels business. Whalley is managing director of Royal Mail Letters and Network.
Whalley's promotion will mitigate concerns that Back "lacks experience dealing with the regulated, highly unionised and politically sensitive UK business," Liberum analysts said.