Royal Mail sees troubled times coming

While Royal Mail has seen an uptick in e-commerce parcel volumes during the pandemic, it has also warned of a longer-term downturn in many of its core markets.

There has already been a drop in fashion sales returns and direct mail advertising contracts have been postponed or cancelled.

In a statement Royal Mail said: “We anticipate that recent restrictions on individuals and businesses will have a negative impact on unsorted and stamped mail, although we are unable to quantify it at this stage.”

Social distancing has been encouraged among the postal operator’s staff but there have been increased levels of staff absence.

The international parcel delivery arm, GLS has seen issues with travel restrictions in Spain, Italy and France impacting B2B volumes. B2C volume increases have not offset this drop.

Royal Mail Group expected to have an an adjusted operating profit of £300 million – £340 million for its current financial year, however there is the potential for sharp and sustained economic downturns in many of its core markets.

Rico Black, group chief executive officer at Royal Mail said: “We are entering a period of significant uncertainty in a good financial position. We have a strong balance sheet. We have substantial levels of liquidity and low levels of debt. We are taking immediate steps to further reduce our costs and protect our cash flow.”