Royal Mail: profits to surpass £500m in 2020

Royal Mail had record breaking third quarter results with revenue growing 9.3% year on year. Parcel growth more than offset the decline of letter mail.

On its busiest day of the peak season, it delivered 11.7 million parcels, a 32% increase on the busiest day of the first 2020 lockdown. Thanks to volumes clashing with staff numbers and the new-normal health & safety requirements, service quality was impacted.

Addressed mail also fell by a lower than expected amount – just 14% as against 33% in Q3 2019.

Moving forward, Royal Mail Group expects its operating profit to exceed £500 million for the final year results.

Keith Williams, non-Executive Chair commented: “The third quarter saw unprecedented parcel volumes in Royal Mail, driven by online shopping and the peak Christmas period, with 496 million parcels handled, the busiest in our company’s long history. The decline in addressed letter volumes slowed to 14% in Q3, with a decline of 9% in December, compared to around a third earlier in the year, excluding the impact of elections.

“GLS also saw elevated volumes and delivered 228 million parcels in the third quarter, growth of 27%.

“Our colleagues have worked incredibly hard to deliver these exceptional volumes at a time when many units have experienced rising levels of COVID-19 related absences, including necessary self-isolation.  I want to thank them for their extraordinary dedication.

“At Royal Mail our busiest day during the quarter saw 32% more parcels delivered than our busiest day during the first national lockdown in 2020. Given these record volumes, we recognise that at times our service during the period was not always as we would have wished. But thanks to the efforts of our team, the retention of around 10,000 of the 33,000 flexible workers from the Christmas peak, and the introduction of new processes, we have been making encouraging progress. We are resolutely focused on delivering a comprehensive service despite the challenging circumstances.

“We are proud to be working closely with the public health authorities to ensure the vital and timely delivery of vaccination letters and COVID-19 test kits. This all forms part of our dedication to serving our communities. We understand the importance of this mission. At all times, the safety of our colleagues and customers is our utmost priority.”

The Royal Mail Non Executive Chair concluded, “Given the stronger than anticipated trading, primarily driven by further COVID-19 restrictions and improved letter volumes, we now expect group adjusted operating profit to be well in excess of £500 million for FY2020-21.”