Royal Mail has reported a staggering loss of over one billion pounds after a year marred by industrial action, poor delivery performance, and other factors. Parent company International Distributions Services (IDS) disclosed that Royal Mail's profit plummeted to £1.044bn in the year ending March, down from £250m recorded a year earlier.
A major contributor to this financial setback was the ongoing industrial action taken by postal workers alongside decreased demand for Covid-19 kit deliveries and online shopping. These factors negatively impacted not only Royal Mail’s earnings compared with the previous year but also the company's international parcel and letter deliveries through Post Office branches.
On an adjusted basis, Royal Mail suffered an operating loss of £419m; however, it still managed to exceed market expectations. The fallout between CEO Simon Thompson and unions led him to resign last week, but he will remain at his post until October end.
In addition to these challenges, Royal Mail failed in its efforts towards increasing productivity during a tumultuous year when 10,000 jobs were cut. IDS reported an overall loss of £748m for this financial cycle ending 26 March as opposed to a previously recorded profit of £577m.
Despite witnessing growth in parcel deliveries due to increased online shopping during the pandemic peak periods, demand dipped recently causing further setbacks for the postal service giant. However, IDS highlighted successful cost-cutting measures executed in H2 of their financial calendar which helped "rightsize" its business operations while acknowledging that service quality had declined.
The upcoming deal with Communications Workers Union - scheduled for voting by members later this month - is expected to pave way for “further operational efficiencies” aimed at making Royal Mail more competitive within industry standards. IDS Chairman expressed optimism about these developments saying there now exists "a clear path towards a more competitive and profitable Royal Mail", ensuring better services for customers while also reducing environmental impact.