Royal Mail owner International Distribution Services said its UK postal arm grew revenues and earnings despite soaring staff costs after the Government’s job tax hike.
IDS – bought last year by Czech billionaire Daniel Kretinsky – said Royal Mail saw underlying earnings jump to £5 million in the year to March 31, up from £2 million a year earlier, as revenues lifted 2.6% to £8.4 billion, in spite of rising national insurance contributions.
The previous year had also benefited from the 2024 general election boost to letter mailings.
But earnings in the wider IDS group slumped by a fifth to £222 million as the firm’s GLS parcel arm was hit by regulatory changes in Italy and a challenging trading environment in Canada.
GLS earnings fell 17.1% to £237 million over the year.
The group said parcel volumes rose 7% to 1.4 billion over the year, but addressed letters fell 10% to 5.7 billion.
It said the decline reinforced the need to overhaul the universal service.
Royal Mail is pressing ahead with the roll-out of changes nationwide that will see second class post delivered every other weekday, with the Saturday service being scrapped across the UK.
It comes after an agreement with trade unions, which had been holding up the extension of the changes across its full network of around 1,200 delivery offices.
Royal Mail is under increasing pressure to improve service levels, with regulator Ofcom launching an investigation earlier this month into the firm’s failure to meet its delivery targets over the past year.
Royal Mail revealed in May it had missed targets for another year running, achieving 75.7% of first class mail arriving the next working day over the 12 months to the end of March and 90.2% of second class mail delivered within three working days.
It was fined a record £21 million by Ofcom in October last year for missing targets in 2024-25.
Martin Seidenberg, group chief executive at IDS, said: “Following Royal Mail’s agreement with the unions we are rolling out universal service changes across the UK which will lead to a more efficient, reliable and sustainable service for our customers.
“GLS continues to grow revenue and parcel volumes despite challenging conditions in parts of Europe, underlining the resilience of the group and the strength of our international network.”
IDS said it is continuing to ramp up its network of parcel lockers to capitalise on booming ecommerce and marketplace sales, with out-of-home parcel volumes up 40% over the year for Royal Mail.
This article was written by Holly Williams from The Evening Standard and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to legal@industrydive.com.