Royal Mail forecasts significant profit growth

Royal Mail has forecast a significant jump in profits, even in the face of labour shortages that may make things difficult in the coming peak season.

Labour shortages in the UK and EU markets could lead to cost pressures affecting the coming peak season. Even so, in the first half, profits should be between £395 million and £400 million in the current half of the financial year. This would be ten times the profits made in the same period of 2020-21.

According to Royal Mail, “We are increasingly confident that domestic parcels are rebasing at a significantly higher level than pre-Covid and believe we are maintaining our share of the market.”

In the first five months of the financial year, group revenues grew 8.2% to £5.1 billion.

Even with cost pressures, the postal operator forecasts even higher profits in the next half of the financial year.

Keith Williams, chairman of Royal Mail, said: “In Royal Mail, we are increasingly confident that domestic parcels are rebasing at a significantly higher level than pre-Covid and believe we are maintaining our share of the market.

“Whilst we continue to expect further normalisation of parcel performance as we unwind from the pandemic and anticipate some upward pressure on costs, both adjusted operating profit and margin are expected to be higher in the second half compared to the first half.”

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