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Britain’s Royal Mail expects its 2023 losses to be around the mid-point of its prior forecast range as the firm took measures to cut costs and mitigate the impact of strikes, its parent company said today.
The 507-year-old Royal Mail, which was privatised in 2013, is in the middle of a crisis, losing millions of pounds due to staff strikes in a long-running row over pay and conditions.
The company said it now expects an adjusted operating loss near the mid-point of its previous forecast range of £350-450m for the fiscal year ending March 31.
“Credit should go to management, that actions taken to mitigate the impact of more recent strikes have limited the financial impact,” Hargreaves Lansdown analyst Matt Britzman said in a note.
Royal Mail, part of International Distributions Services, said its 2023 outlook was hurt by strikes on 18 days in the fiscal year – six more than previously expected.
It said that “tight control of costs and strike contingency measures” reined in some of the losses.
Strikes by British postal workers roiled the key Christmas period after Royal Mail’s largest labour union rejected the company’s revised offer to increase wages by up to 9% over 18 months, instead of the previously planned two years.
Royal Mail said the number of voluntary job cuts required to achieve its target of a reduction of 10,000 Full Time Equivalent (FTE) roles by August will be significantly lower than the forecast cuts of 5,000-6,000 made in October, partially helped by strong attrition levels.
In a trading update, the company said Royal Mail’s revenue fell 12.8% year-on-year in the nine-month period to the end of December, while total parcel revenue declined 17.8%.
Parcels account for 54% of the firm’s total revenue.
In the first nine months of the fiscal year, London-headquartered Royal Mail said the net cost of the strikes was about £200m. It also expects cash flow to turn negative in 2024.
