Royal Mail: 'We will invest £1.8bn to align with UK's modern day postal habits'

Royal Mail has revealed its half-year results to September 29 2019.

The company’s group revenue has gone up 5.1 per cent, while UKPIL (Royal Mail’s UK Parcels and International Letters segment) is up 1.8 per cent, said to be the best for five years.

There has been a reported operating profit of £61m - said to be up £65m due to lower costs relating to terms.

Royal Mail’s adjusted group operating profit of £165m means the company has fallen 13.2 per cent in this category. An in-year trading cash inflow has also been revealed at £152m. Meanwhile, net debt increased to £1.372m.

Rico Back, Royal Mail’s group chief executive officer, commented: “Our profitability performance is in line with our expectations for the half year, despite considerable UK economic and political uncertainty.

“Group revenue was up 5.1 per cent, including our best UK revenue performance in five years. UK parcel revenue growth more than offset letter revenue declines…

“The UK letter revenue performance in the first half is our best for five years. It will also benefit from the General Election in the second half. But, the outlook, excluding elections, for the letters business in the UK is challenging.”

He continued: “Lower than anticipated GDP and lower GDP forecasts for 2020-21, together with business uncertainty, are expected to have an impact on addressed letter volumes.

“For 2019-20, we now expect addressed letter volume decline (excluding elections) to be in the 7-9 per cent range. In 2020-21, we expect letter volume decline (excluding elections) may be in the 6-8 per cent range.”

According to Rico, people in the UK are now posting fewer letters and receiving more parcels - thanks to the rapid increase in technology and online shopping and delivery.

Royal Mail is ‘committed’ to “investing £1.8bn in our transformation” to try and adapt to major societal changes: “We want to change, working with our unions, but we can only do so through an affordable resolution.

“We have changed many times before. We will do it again.”

A trading update covering the nine months to December 23 2019 is expected to be issued next year, on February 6 2020.