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Royal Mail has slumped to a first-half loss and reiterated warnings it will tumble deeper into the red for the full-year after strike action cost it around £100 million. Owner International Distributions Services (IDS) said Royal Mail fell to a £219 million underlying operating loss in the 26 weeks to September 25 against earnings of £235 million a year ago.
It said three days of strike action in the first half cost Royal Mail around £70 million, while a further five days in October are estimated to have cost it about another £30 million. Royal Mail expects full-year losses of around £350 million to £450 million, including the direct impact of strike days.
The wider group – which also includes delivery service GLS and Intragroup – reported pre-tax losses of £127 million for the first half, against profits of £315 million a year ago. Royal Mail last month revealed it will consult on up to 6,000 redundancies as the delivery giant blamed industrial action for mammoth financial losses.
Keith Williams, non-executive chairman of IDS, said: “We are now heading in a clear direction in light of the substantial losses in Royal Mail. Whilst our frontline management population under Unite/CMA has agreed both pay and change in the last few months, progress on a deal for frontline employees has been blocked by the actions of CWU.
“Accordingly, we have started to implement the change needed to rightsize Royal Mail which will ensure that it is both better placed to serve our customers’ needs in parcels, as well as letters, bring it back to profitability and provide a sustainable future. We believe that this is the best course of action for the long-term survival of Royal Mail even if it results in short-term disruption.”
He added: “The board reiterates that in the event of the lack of significant operational change in Royal Mail it will look at all options to preserve value for the group including the possibility of separation of the two businesses.”
