Royal Mail has cheered returning to an underlying profit for the first time in three years despite a “competitive and challenging” backdrop.
In its first set of figures since the group’s £3.6 billion takeover by Czech billionaire Daniel Kretinsky’s EP Group, owner International Distribution Services (IDS) said Royal Mail delivered underlying earnings, excluding voluntary redundancy costs, of £12 million for the year to March 31.
This compared with losses of £336 million the previous year.
But, with redundancy costs included, Royal Mail still remained in the red with underlying operating losses of £8 million, it said.
IDS said the underlying improvement at Royal Mail came “despite an increasingly competitive and challenging trading environment”.
The wider group, which also owns the GLS parcel business, reported underlying earnings of £278 million, against losses of £28 million in the previous year.
The figures come after a milestone year for the group, which saw Royal Mail taken into foreign ownership for the first time in its more than 500-year history.
The year has also seen regulator Ofcom rubber-stamp reforms allowing Royal Mail to ditch second class letter deliveries on Saturdays and change the service to every other weekday, which the group can start rolling out from July 28.
Martin Seidenberg, group chief executive of IDS, said: “It has been a year of change for IDS.”
He added: “Royal Mail returned to profit for the first time in three years, marking an important milestone in the company’s turnaround.
“With IDS’s acquisition by EP Group complete, and universal service reform decided, now is the time for us to drive the business forward and capitalise on our momentum.”
The group said it had started “detailed work” ahead of rolling out changes to second class deliveries, as part of reforms to the universal service, with the firm “using the learnings from pilots”.
It added it would continue to invest heavily in postal lockers following the EP Group takeover, with Royal Mail having boosted its out of home locations by almost 70% to about 24,000 by the end of August and launched its own branded lockers.
GLS continued to expand its network to more than 110,000 out-of-home access points and more than doubled the size of the GLS locker network to more than 20,000 by the end of August, the company said.
“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,” Mr Seidenberg said.
