Royal Mail made £1 billion loss after painful strikes: ‘We failed…and we apologise’
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oyal Mail made a lack of £1 billion within the 12 months to the top of March 2023 after the postal service was hit by a wave of strikes and droop in demand for parcel deliveries.
Royal Mail proprietor International Distribution Services mentioned the loss was “due to industrial action, inability to deliver the in-year benefits of planned productivity improvements, lower test kit volumes and a weaker online retail market.”
The agency mentioned it had accomplished a ten,000 discount in its employees numbers by the top of March, and final month reached a take care of the Communication Workers Union that might see a ten% pay rise and revenue share scheme for remaining employees.
IDS chair Keith Williams mentioned: “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.”
“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.”
The £1 billion loss by Royal Mail compares to a £250 million revenue it made within the earlier 12 months. The bulk of the loss pertains to a impairment cost of £539 million for the worth of Royal Mail which it mentioned was ‘given the current risk backdrop and ongoing industrial dispute.’
It follows an 18-day spate of strikes by postal employees, together with in the course of the essential Christmas buying and selling season, which the agency mentioned triggered customers to buy in-person somewhat than on-line and retailers favoruing different parcel carriers as an alternative of Royal Mail.
Demand for ‘tracked returns’ parcels fell 21% year-on-year, whereas complete parcel income was down 18.5% to £3.9 billion. Letter income fell 5.7% to £3.5 billion.
The agency additionally suffered a cyber-attack which is believed to have value it no less than £20 million to take care of, and earlier this week turned the topic of an Ofcom investigation into failing to satisfy its annual supply targets. Last week, CEO Simon Thompson mentioned he would give up his function and go away the corporate in October.
“If it does not provide a satisfactory explanation and we determine that Royal Mail has failed to comply with its obligations, we may consider whether to impose a financial penalty,” Ofcom mentioned.
Royal Mail bosses mentioned: “We apologise to everyone for not delivering a quality of sevice to the standard we expect. We failed on some aspects last year and we apologise for that. It’s obviously been a difficult year for Royal Mail, and our customers and shareholders.”
IDS shares fell 2.3% to 217p.
Matt Britzman, Equity Analyst at Hargreaves Lansdown, mentioned: “It’s been difficult to find too much to get excited about at IDS recently, as the owner of Royal Mail has felt the hefty impact of union battles over the past year or so. Results show the full extent of the damage caused by 18 days of strikes alongside a weaker macro environment, with revenue at Royal Mail down over £1bn.
“The silver lining is that performance wasn’t quite as bad as analysts had forecast, and an agreement is now in place with the union on pay; the final hurdle is a vote from union members, which should end the lingering threat of further strike action. That means IDS can get back to concentrating on hiring a new CEO”.