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In an update for the three months to the end of December 2024, IDS said Royal Mail is on track to return to operating profit, “representing a significant milestone in the turnaround” of Royal Mail, following two years of losses.”
The parent company revealed that Royal Mail had delivered more than 99% of items sent on or before the recommended last posting dates in time for Christmas.
IDS added that improvements to Royal Mail’s operations allowed it to make deliveries until 9pm for the first time over the festive season, which enabled it to meet next day delivery demand over the peak shopping period.
Royal Mail also saw a 19% leap in the number of parcels sent using its tracked services over Christmas, rising to 188 million parcels.
However domestic parcel volumes remained static in Q3. Whilst the total number of Royal Mail parcels rose by 2% to 395 million, compared to 387 million in the previous year, domestic parcels stayed level at 334 million. International parcels fared bettter, rising to 61 million, from 53 million, a 15% rise.
The group also revealed that it’s parcel hubs in Daventry and Warrington processed over 75 million parcels during the Christmas period, an increase of 23% year on year.
Overall revenue rose 2.4% in the period which the group attributed to an improved operational and financial performance.
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.
IDS hailed continued parcel revenue growth at Royal Mail in the face of a “challenging macro-economic backdrop.”
Martin Seidenberg, IDS chief executive, said: “I am proud of my colleagues across Royal Mail and GLS, who went above and beyond for our customers this Christmas. At Royal Mail, we have made more progress to adapt to customer demand.
“Successful execution of our union agreements is bringing increased operational feasibility, which, together with increased automation and 1,000s of new vehicles, is leading to improved reliability. Over 99% of items posted on or before the last recommended posting dates arrived in time for Christmas
“In particular, I’m pleased with the strong growth in tracked volumes and the progress we were making expanding our out of home network, giving customers more convenient options to send and receive parcels.
“We plan to grow our network to over 21,000 drop off locations by the end of March 2025, including around 1500 lockers.”
Keith Williams, IDS chairman, added that the performance in Q3 demonstrated the continued progress of the group over the last five years.
He added: “Until then, Royal Mail had been slow to implement the changes necessary to adapt to customer demand for more parcels and fewer letters, leading to declining profitability.
“Over the last five years, both management and colleagues have faced a letter volume decline of 35% and further growth in parcels, which required significant investment and changes to how we operate.
“We now have a business which can better navigate future change and is confident about the future. There remains more to do and further investment will be required to continue on this path.
“On behalf of the board, I would like to pay tribute to colleagues across the business who have made that change happen and adapted to different ways of working to meet new customer demand.”
The sale of Royal Mail to Daniel Křetínsky’s EP Group 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.
Under the terms of the sale, the government will retain a “golden share” in IDS, requiring any changes to Royal Mail’s ownership, tax residency or headquarters to be given 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.
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