Half-year profits fall at Royal Mail

Profits at Royal Mail saw a 30% decline in the six months to September 27 after revenues dipped and redundancy costs soared.

The company’s reported pre-tax profit during the half-year period slid to £116m, down from £167m the year previous, while overall revenue dipped by 1.85% year on year to fall from £4.47bn to £4.39bn.

Growth of around 4% in Royal Mail’s UK and European parcels offset a 4% decrease in its UK letter revenue.

Transformation costs, meanwhile, rose to £94m due to the costs of higher levels of voluntary redundancy. Royal Mail reported that close to 3,000 employees left in the six months to September.

Royal Mail CEO Moya Greene said that, as in previous years, the company’s full-year performance would depend largely on the Christmas period.

She said of the results: “We delivered parcel volume and revenue growth in the UK, which continues to be a challenging market.

“Addressed letter volume decline was at the better end of our forecast range.”

She added: “We are driving through a range of product innovations and service improvements at pace, as well as targeting new areas of growth and enhancing our offering.

Elsewhere, Royal Mail’s net debt rose by just over 34% in the half-year, from £275m to £369m, mainly due to the payment of dividends.

The CEO continued: “As a result of an acceleration of our UK cost savings programme and a better than expected performance in GLS (General Logistics Systems), group operating profit before transformation costs was flat in the first half.

“Given our strategic focus on costs, we now expect underlying UKPIL operating costs to be down by at least 1% for the full year.”