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- 17 October 2022
- Transport / Logistics Services
Royal Mail’s parent company International Distributions Services plc has published a trading update showing a first half operating loss of £219 million, compared to a £235 million profit in H1, 2021.
A large part of the losses have been attributed to the ongoing industrial action by the Communication Workers Union (CWU) that has had six days of strikes to date. The company projects that full year losses will be as much as £450 million should more strikes go ahead and customers stay away.
In the trading statement, that infuriated the union, International Distributions Services said, “Royal Mail urges CWU to immediately call off planned strike action and embrace our offer of Acas talks to urgently find a resolution to the current dispute.
The position of Royal Mail has deteriorated due to a combination of the impact of the industrial dispute, an inability to deliver the joint productivity improvements agreed with CWU under the Pathway to Change agreement, and ongoing macro-economic headwinds. Although action was taken in H1 to lower labour costs, the business was unable to reduce costs quickly enough in line with deteriorating parcel volumes.
In response, we will be starting the process of consulting on rightsizing the business. Short term cost efficiencies are being achieved through an estimated reduction of around 5,000 FTEs by March 20232 (on a rolling 12 month basis), to better match our costs to current parcel and letter volumes. Our operational FTE workforce will need to reduce by an estimated c.10,000 by the end of August 20232 (on a rolling 12 month basis).”
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