Last Mile Brief 19/05/2023: Royal Mail admits strikes contributed to operating loss of £1 billion
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Royal Mail owner International Distributions Services plc has issued its unaudited preliminary results for the 52 week period ended 26 March 2023. The release confirmed that Royal Mail had recorded a loss of £1 billion over the period.
To be precise, the Royal Mail posted a loss of £1,044 million, while in stark contrast, GLS earned a profit of £296 million.
The mammoth losses of the Royal Mail appear even worse when compared to the previous financial year, when the postal operator netted a profit of £250 million.
As for what caused these losses, International Distributions Services plc blamed “industrial action, inability to deliver the in-year benefits of planned productivity improvements, lower test kit volumes and a weaker online retail market.” The company added that this had been “partly offset by successful management actions to reduce costs and rightsize the business in the second half of the year.”
Commenting on the figures, Keith Williams, Independent Non-Executive Chair, commented:
“I said before that we had reached a crossroads at Royal Mail. Now that we have a negotiators agreement with CWU that will shortly go out to ballot, and thanks to the good progress made on our five-point plan to stabilise Royal Mail, our destination is coming into sight.”
“There is now a clear path towards a more competitive and profitable Royal Mail, delivering improved services for our customers whilst further reducing our environmental impact. Importantly, if ratified, the CWU agreement provides greater job security and increased rewards – through both pay and profit share – for our employees. Successful delivery of the agreement will be key.”
“Quality of service has been significantly affected by industrial action and high levels of absence. I am sorry that we have not delivered the high standards of service our customers expect. Improving quality of service is our top priority.”
“GLS has a proven track record of growth, solid margins and cash generation. During 2022-23 it delivered a robust performance in a tough macro-economic climate. Its flexible operating model, balanced B2C and B2B portfolio, diversified geographic exposure and continued investment have underpinned good progress this year and we continue to invest for long-term growth and margin accretion.”
“So as we enter 2023-24 we have grounds for optimism. The economic climate remains challenging, and Royal Mail faces the task of rebuilding business from the damage caused by industrial action. To do this successfully and plan for the long term, urgent reform of the Universal Service Obligation is essential. Our plan is to return to group profitability this year but also seize the opportunity for both businesses to deliver ongoing profits thereafter, to the benefit of both our employees, customers and shareholders.”