Royal Mail sends 10 per cent revenue growth as parcel deliveries grow by a third

The UK’s postal service has today announced that it has seen “strong” growth in its first half as coronavirus restrictions push parcel postage.

Royal Mail has reported that its group revenue increased by 9.8 per cent for the first six months of its financial year, jumping from £5,166m in 2019 to £5,671m.

The growth was largely driven by a rise in the amount of packages sent, with parcel revenue up 33.2 per cent.

This was offset by a reduction in the amount of letters sent during the period, with revenue in the area declining by 20.5 per cent.

The company also reported an adjusted operating loss of £129m compared to last year’s £75m profit, with costs of mix change (£95m), COVID-19 (£85m), voluntary redundancy (£147m) and international conveyance (£32m).

This comes as Royal Mail recruits for 33,000 flexible roles over the Christmas period.

Keith Williams, interim executive chair, commented: “The growth in online shopping and parcels during the pandemic, combined with our increased focus on delivering more of what customers want, has led to revenue growth of nearly 10 per cent for the group in the first half, with Royal Mail revenue up nearly 5 per cent.

“For the first time, parcels revenue at Royal Mail is now larger than letters revenue, representing 60 per cent of total revenue, compared with 47 per cent in the prior period.

“We have been pushing forward with our transformation in Royal Mail and delivering more new innovations, products and services for our customers. Whilst we have done exceptionally well in terms of revenue and have seen real growth for the first time since privatisation, we have recorded a first half adjusted operating loss of £129m after restructuring charges of £147m, and a reported operating loss of £176m.

“As anticipated the reduction in letter volumes has had a significant impact on the regulated business which lost £180m in the first half, and demonstrates the need for change in the Universal Service.

“The level of revenue growth in the first half shows we have the right strategy and that Royal Mail can be cash generative and a sustainable, profitable business in the future.

“But we need to speed up the pace of change in order to create a profitable business in the UK.

“We are making good progress on the initiatives we set out in June.

“We are reducing management layers to increase our speed of decision making, directing the business towards those activities which generate quicker payback and focusing our capital expenditure on projects which will improve our customer proposition and increase our efficiency.

“These initiatives should add to top line growth and generate a saving of around £330m in operational costs.

“Talks with our unions are at an important stage. We have been encouraged by our talks with CWU, which have intensified over the past weeks.

“With the improved revenue performance, we have focused on how we can deliver efficiency and productivity in a growth environment together, which will enable the business to see the benefits of operational leverage.

“We are already working hard to deliver Christmas, recruiting around 33,000 additional flexible workers in Royal Mail over the peak season, and we continue to provide significant support to the covernment’s Covid-19 testing programme and the distribution of protective equipment.”