Royal Mail’s parcels revenue has overtaken letters for the first time and now represents 60% of its entire turnover, according to the postal group.
Turnover rose in the first half of its financial year to 27 September by almost 10% to £5.7bn.
However, even the 31% increase in parcels volume did not prevent a 90% drop in its pre-tax profits to £17m.
It said that during the period it had seen “a staggering reduction” in the amount of letters it delivered.
Volumes plummeted by 28% and Royal Mail said this significant change in customer sending habits reinforced the view that it rebalances its service model more towards parcels.
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Keith Williams, Royal Mail interim executive chair said: “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 £129 million after restructuring charges of £147 million, and a reported operating loss of £176 million.
“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.”
Williams said: “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 Government's Covid-19 testing programme and the distribution of protective equipment.”
He added that parcel growth was expected to remain robust in Q3, with more uncertainty over trends in Q4 due to Covid-19, further recessionary impacts and trends in international volumes.