Royal Mail results and performance for first half year

Last Thursday, Royal Mail results were reported for their half year and things are looking up for the UK’s national postal carrier. The boost in online shopping and resultant deluge in parcels has seen the company only lose £700,000 a day instead of £1 million a day. Additionally, Royal Mail parcels revenue is now larger than their letters revenue.

Group revenue is up 9.8%, driven by strong parcel growth at both Royal Mail and GLS. The Royal Mail Group reported an operating loss of £20 million, adjusted operating profits of £37 million and strong growth in GLS profit. Before adjustments, Royal Mail made £17 million profit overall but only because star performer GLS delivered a hefty £150 million profit, more than offsetting the loss made by Royal Mail. This represents revenue growth for the first time since privatisation.

The growth in online shopping and parcels during the pandemic, combined with our increased focus on delivering more of what customers want, has led to revenue growth of nearly 10% for the Group in the first half, with Royal Mail revenue up nearly 5%. For the first time, Royal Mail parcels revenue is now larger than letters revenue, representing 60% of total revenue, compared with 47% in the prior period.

GLS delivered strong revenue growth of 21.7%. B2C accounted for 56% of GLS volume in the first half. Adjusted GLS profits were up to £166 million – a rise of 84.4%.

The reduction in letter volumes has had a significant impact on the regulated business which lost £180 million in the first half, and says Royal mail demonstrates the need for change in the Universal Service. Some like Citizens Advice don’t like the sound of this – in all likelihood it would mean the loss of letter deliveries on Saturdays.

“As the consumer advocate for the postal sector, we’re wary about any calls made to change the Universal Service Obligation. The Universal Service Obligation is a vital safety net that keeps post fair and affordable. Any rebalancing needs to reflect this, so it focuses on people’s needs, not just the bottom line.

Even before the pandemic, six in ten people said they’d feel cut off from society if they couldn’t send or receive post. During these uncertain times, post is increasingly becoming a lifeline for many. It’s allowing people not only to stay connected with loved ones, but also to receive vital financial and health-related information.”
– Alistair Cromwell, Acting Chief Executive, Citizens Advice

With letters business slowing and parcels on the rise, the pandemic as obviously been a challenge with the cost of COVID-19 to Royal Mail being in the region of £155 million. With Black Friday just days away, many Tamebay readers are interested in Royal Mail’s delivery performance and specifically for parcels for which performance isn’t publicly reported.

Royal Mail results for one Tamebay reader

One Tamebay reader, after reports of many non-receipts from customers, did an audit of 81 consignments that we sent by Royal Mail 48 on Monday the 9th of November.

Just 12% of parcels were delivered within 3 days, 54% took 7 days and 12% still had not been delivered by Thursday the 19th of November, a full 10 days after despatch.

This may of course not be typical of everyone’s experience but it would suggest that many parcels are taking longer to be delivered than Royal Mail’s stated delivery aim.