Royal Mail’s strategy to improve its performance by shifting its focus from letters to parcels is paying off, with the group revealing its first profit in three years.
The results, which are the first since the company was acquired in April by Czech billionaire Daniel Kretinsky, revealed an annual profit of £12m for the 12 months to 30 March, excluding redundancy costs, compared with a £336m loss in the previous period.
However, when redundancy costs are included, Royal Mail still suffered underlying operating losses of £8m.
Over the year to 31 March, Royal Mail parcel volumes increased 6% while letters declined 4%.
International Distribution Services (IDS), which owns Royal Mail, pointed to its modernisation strategy which aims to boost efficiency and cut costs, parcel volumes growth, and a rapid rollout of Royal Mail’s out of home delivery options as key drivers to its improved performance.
It added that Royal Mail now has over 2,000 lockers and 7,500 Collect+ stores, 11,500 Post Office branches, 1,200 customer service points and 1,400 parcel postboxes.
Martin Seidenberg, IDS chief executive said the return to profit marked an “important milestone in the company’s turnaround”.
“Under the ownership of EP Group we will continue to invest in the rapid expansion of our out of home network across both businesses to meet the changing needs of our customers around the globe,” he added.
The results follow Royal Mail’s announcement last week of its plans to roll out 3,500 solar-powered postboxes which can take small parcels.
Royal Mail’s takeover by Kretinsky was controverial, marking the first time Royal Mail has been taken into foreign ownership.
Under the deal the government has retained a “golden share” in Royal Mail, which requires it to approve any major changes to the company’s ownership, HQ location and tax residency.
