Křetínský: ‘We can help Royal Mail to finalise its transformation’

Křetínský’s EP Group has lodged a near-£3.6bn bid for Royal Mail parent International Distribution Services, which is subject to shareholder approval and government scrutiny.

In an interview with BBC business editor Simon Jack broadcast on Radio 4’s Today programme this morning (16 July), Křetínský said: “I truly believe that we can help now, and then we can contribute and then we can play our little role in the history of Royal Mail.

“Allow me to remind you that in 2012 Royal Mail market share on the parcel delivery service was 75%. It is 33% today. This is the problem of Royal Mail,” he stated.

Jack put it to Křetínský that unions feared that he only cared about parcels and could split the letters and parcels businesses.

Royal Mail’s Universal Service Obligation requires the business to deliver a fast-declining volume of letters to a growing number of households – currently around 32m. The company has called for urgent reform of the USO that would maintain Monday-Saturday deliveries for First Class post, with other mail delivered every other day.

He responded: “No way and this would be a complete misunderstanding.

“Royal Mail’s obligation, tradition, really its heart and blood is to provide Universal Service Obligation for letters and as long as we would be investors that would always be the case.

“We can help Royal Mail to finalise its transformation to be the best parcel delivery company in the UK and to grow its market share – this is fundamental and necessary.”

He said there was “no difference” between the interests of shareholders and employees of Royal Mail.

“72.5% of revenues of Royal Mail go to personnel costs, to wages. We are all on the same ship and the ship needs to be successful.

“If the ship is successful it’s a success for everybody. If the ship is not successful it’s going to be a disaster – also for the employees because there is no pocket from which you can take the money other than this one.”

Křetínský has guaranteed there would be no compulsory redundancies until 2025, which Jack described as “a heartbeat away” and queried why there couldn’t be a longer guarantee.

“We are there to make sure that Royal Mail is competitive, that we grow the business, and we need the same or larger number of people than we have today. This is the plan,” Křetínský responded.

“We can’t make unconditional guarantees of jobs, because we need the cooperation from the other side.

“But… if we have the right cooperation from the employees’ side, I am absolutely convinced, and we show it by the bid, that we will get there.”

EP Group has also said that it would guarantee the USO one price goes anywhere for five years.

He said that “as long as I’m alive” he completely excluded the notion that Royal Mail could walk away from the USO.

In the IDS results for the 53 weeks to 31 March, the group’s overall sales rose by £635m to £12.68bn.

Overseas parcels wing GLS posted sales of nearly £4.9bn and an adjusted operating profit of £320m; while Royal Mail made an adjusted operating loss of £348m on sales of £7.8bn – although the business was described as “close to breakeven” in H2.

Note: IDS changed its name from International Distributions Services to International Distribution Services earlier this year.