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The owner of Royal Mail has said it received a fillip from parcel deliveries over Christmas, putting it on track to return to annual profit, as its £3.6bn takeover by the Czech billionaire Daniel Křetínský nears completion.
International Distribution Services (IDS) said Royal Mail delivered more than 99% of items sent on or before the recommended last posting dates in time for Christmas.
The 509-year-old postal company, which had struggled to make deliveries on time in the run-up to the crucial period, said improvements to its operations allowed it to make deliveries until 9pm for the first time over the festive season. This allowed Royal Mail to meet demands from its customers for next day deliveries over the peak shopping period.
Royal Mail said there had been strong growth in the number of parcels sent using its tracked services over Christmas, a 19% increase on a year earlier, to 188m parcels.
Meanwhile, the company reported a 2.4% rise in revenue in the three months to the end of December, amid what it called improving operational and financial performance.
Royal Mail expects to return to adjusted operating profit this financial year, excluding voluntary redundancy costs, despite a “challenging macroeconomic backdrop”. It follows two years of losses.
The company said this provided a “solid foundation for the business to build on in future” before the takeover of IDS by Křetínský’s EP Group.
Revenues from parcels rose by 3.2% in the three months to the end of the year at Royal Mail, while letter revenues increased by 1.4%.
The group said the volume of addressed letters fell again, declining by 7%, but this was offset by increases in the price of stamps. The price of a first-class stamp rose by 30p in October, to £1.65.
The communications regulator Ofcom has been accused by Citizens Advice of “letting the company get away with setting rocketing prices in the wake of half a decade of missed delivery targets”. Royal Mail also wants to reduce second-class deliveries to alternate weekdays to save costs.
EP Group’s takeover is expected to be completed by the end of March, after it was approved by the UK government in December.
It would the first time Royal Mail, whose history can be traced back to 1516, has been controlled by an overseas owner.
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Under takeover, the government will retain a “golden share” in IDS. This means any changes to Royal Mail’s ownership, tax residency or headquarters will need government assent. The Royal Mail brand will also be protected for as long as EP owns the company.
The deal has also been cleared by European and US regulators.
Martin Seidenberg, the chief executive of IDS, said Royal Mail had made “more progress to adapt to customer demand”.
“Successful execution of our union agreements is bringing increased operational flexibility, which together with increased automation, and thousands of new vehicles, is leading to improved reliability,” he said.
Seidenberg added that the company was working to mitigate inflationary pressures.
IDS said in November that the increases in employers’ national insurance contributions set out in the autumn budget would add £120m to its costs, and said it could not rule out job cuts or price hikes to offset the blow.
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