Royal Mail profits dip as it also warns on industrial dispute impact

Royal Mail's future holds many
challenges despite a
rise in the dividend
– but all hinges on
how it handles
the unions
Kumar Sriskandan  Alamy

The mid-cap group also cautioned that "the industrial relations environment" could impact its performance in the second half, with the company now in external mediation with the CWU.

Statutory pre-tax profit fell 30% £77mln, despite a 2% rise in revenue to £4.8bn on an underlying basis compared to a year earlier. The global arm of the branch posted "strong" growth - revenue swelled by nine percent to £1.2 billion.

Royal Mail was controversially privatised in 2013.

Royal Mail's United Kingdom parcels and letters business, reported revenues of £3.6 billion, with operating profits falling by £12 million.

Last month Terry Pullinger, deputy general secretary of the Communication Workers Union, said he would rather "smash Royal Mail to bits" than back down in his attempts to block the move. "Our priority is to reach agreement with the CWU to help underpin the sustainability of the business".

"The outcome of our cost performance will be dependent on the absorbable rate of change within our organisation", said the firm.

She added: "GLS delivered a strong performance with revenue up 9 per cent".

The company said it hopes to make considerable cost savings of around £190 million in its United Kingdom letters business. Outside the EU, GLS is also growing through selective acquisitions to capture higher growth markets.

"It is a hard time for Royal Mail and its people", the company said today. "If the group is to win in a highly competitive sector it needs to modernise, and at some pace".

Moya Greene, the chief executive, said that the results showed "a good start to the year", adding that "our investment in our business is paying off".

"We are opening six temporary parcel sort centres and recruiting over 20,000 staff".

On an adjusted measure, stripping out some one-off items, pre-tax profits were £250m, down only slightly on £252m a year ago. "We are also extending opening hours at many of our enquiry offices to help retailers and consumers".

Shares rose more than four percent in early trading.



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