Hermes Parcelnet, which trades as Evri, saw pre-tax profit slashed by over 50% last year as low customer confidence, high inflation, the cost of living crisis, the Ukraine War and a post-pandemic fall in online demand, all took their toll.
However the company revealed this week that it is seeing better times this year, with record volumes which it says are higher than at any point during COVID-19, adding that it is heading for the “busiest peak period in our history.”
Reporting its results for the year to 25 February 2023, the parcel delivery giant said that whilst revenue remained virtually unchanged at £1.464m (2022: £1.465m) pre-tax profit tumbled by 56% to £51m (2022: £117m).
The company attributed the profit fall to economic and political factors in the period resulting in “significant inflation, higher interest rates and a weakening of consumer confidence.”
The year also saw greater volatility in customer demand which the company said was driven by continued economic uncertainty and the impacts of the cost of living crisis.
Its strategic review of the results said the company was also hit by the “anticipated post pandemic channel realignment, as physical stores were not subject to lockdown closures this year. As a result, parts of the online retail market have softened compared to previous years.”
Other pressures reported by the company included rising energy, fuel and wage costs, a continuing shortage of resources driven by Brexit and the pandemic, the cost of moving a number of Evri depots and the opening its new Barnsley superhub.
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The end of the Covid-19 lockdowns, during which parcel volumes had soared, also took its toll on the company. The review said: “Parcel volumes were broadly flat year on year against tough comparatives when physical shops were closed and volumes were up around 70% on pre-pandemic levels. This represents outperformance against a market which declined in 2022/23.
It added: “These factors, volatile consumer demand, resource shortages and rising costs have presented challenges across the parcel delivery industry, which have been further exacerbated by the disruption caused by the continued industrial action impacting Royal Mail during 2022/23.”
On the upside the report noted that, despite these challenges, Evri had driven new growth by winning new business and expanding into new markets, which “offset the unwinding of Covid lockdown volumes and the impact of macro-economic conditions on volumes in certain market segments.”
Looking ahead the company said it had continued to perform “robustly” despite challenging market conditions with volumes steady, despite a declining market.
The review concluded that the company remains confident it will see further growth driven by new volume pipelines and aided by “wide ranging” cost savings.
However it also warned that it is “not immune to the macro-economic conditions impacting customer demand and input cost in the short term.”
An Evri spokesperson said: “Our revenue and volume performance last year was robust and we outperformed the sector, a trend which continues as we win new contracts and grow our business into new areas.
“We are currently experiencing record volumes – higher than at any point during COVID-19 – growing at high double-digit rates and we are on track for the busiest peak period in our history.
” Our performance this year has enabled us to increase our investment in customer service and Christmas preparations including the recruitment of an additional 6,500 colleagues.
“The business has tripled in size over the last five years and is expected to double in size again over the next five years, boosted by last year’s opening of our super-hub in Barnsley and as we benefit from the rise of the marketplaces such as Vinted and Etsy.”