Royal Mail hails ‘resilient’ performance despite 33% fall in annual profits

Royal Mail today reported annual profits for the year to March 27.
Photo: Philip Toscano/PA Wire

Royal Mail today reported annual profits for the year to March 27. Photo: Philip Toscano/PA Wire - Credit: PA

Royal Mail today posted a 33% fall in annual profits to £267m as it took a hit from reorganisation costs.

But the privatised postal delivery company said the fall reflected one-off items, such as pension charges, that distorted its results.

Adjusted annual operating profits before exceptional costs – Royal Mail’s preferred measure of performance – rose 5% to £742m.

And overall revenues edged ahead by 1% to £9.2bn, with chief executive Moya Greene hailing the organisation’s overall performance as “resilient”, although revenue in the UK fell by 1% to £7.6bn as letter volumes declined by 3%.

In contrast, parcel deliveries, where competition from rivals such as of FedEx and UPS have eaten into Royal Mail’s market share, rose 3%.

Under Ms Greene, the company has embarked on an ambitious cost-cutting drive and it confirmed today that it reduced its headcount by 3,500 in the year to March 27.

Ms Greene added: “We are introducing new and improved products and services and responding quickly to changing customer needs.

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“These measures, alongside our emphasis on customer focus and delivering a value for money service, have helped us to maintain our pre-eminent position in UK letters and parcels and driven growth.”

The 500-year-old company was privatised in 2013 and listed on the London Stock Exchange.

Dave Ward, general secretary of the Communication Workers Union (CWU), said that, it a forthcoming review, regulator Ofcom needed to be mindful of the level of competition facing Royal Mail and the need to protect its daily delivery service.

“Royal Mail Group’s strong financial performance, in the face of tough market and regulatory pressures, show the company is well placed to deliver future growth and innovation in the business, working closely with the CWU,” said Mr Ward.

But he added: “The continued fall in letter volumes and the significant level of competition Royal Mail already faces should serve as a reminder to Ofcom that protecting daily deliveries should be the number one priority of its review.”