Profits fall at Royal Mail as costs rise

(Sharecast News) - Royal Mail-owner International Distribution Services posted a fall in annual profits on Tuesday, weighed down by "challenging" market conditions and higher costs.

The company, which also owns the GLS parcel business, saw revenues in the year to March end rise 3.6% to �13.6bn. Within that, Royal Mail's revenues nudged up 2.6% to �8.4bn, and GLS's by 5.2% to �5.2bn.

However, GLS saw profits fall to �69m from �257m, while at Royal Mail, they more than halved, falling to �96m from �198m. As a result, group operating profits slid to �111m from �376m.

IDS said it had been a "robust performance in challenging market conditions".

In particular, it noted that GLS had been affected by regulatory changes in Italy and a softer economic environment in Canada, while at Royal Mail, revenues suffered from tricky comparatives, after sales benefited from election mail in the previous year. Costs such as employer National Insurance contributions also jumped.

The former state monopoly saw the amount of addressed letters sent slump 10%, excluding elections, while parcel volumes rose 7% to 1.4bn. IDS said the long-term decline in the amount of letters being sent reinforced the need to transform the business.

Martin Seidenberg, IDS chief executive, said the year had been one of "real progress...on many fronts, as we invest to build a modern, global logistics business at scale.

"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."

IDS was created in 2013 ahead of Royal Mail being floated on the London Stock Exchange. The 500-year old business was then taken private in 2024 by Czech billionaire Daniel Kretinsky's EP Group in a �3.6bn deal.