Royal Mail Reports First Annual Profit in Three Years After Takeover

Royal Mail has achieved its first annual profit in three years, marking a turning point for the iconic postal company following its £3.6 billion acquisition by Czech billionaire Daniel Kretinsky’s EP Group. The shift towards a profit comes as growth in parcel volumes and major investments in automation and out of home locations helped to counter balance the continued decline in letter deliveries.

Reporting an adjusted operating profit of £12 million for the year ending March — excluding voluntary redundancy costs — Royal Mail reversed its fortunes after years of industrial strife and mounting losses. With those costs factored in, total losses narrowed dramatically to £8 million, a significant improvement from a £348 million deficit in the previous year.

Across the wider International Distribution Services group, which includes the successful European parcels business GLS, adjusted operating profit rose to £278 million, up from a £28 million loss previously. Group revenues increased by 4.8 percent to £13.1 billion with Royal Mail accounting for £8.2 billion, a rise of 7 percent, and GLS bringing in £4.9 billion.

Parcel volumes climbed by 6 percent, offsetting a 4 percent fall in addressed letter deliveries. After years of lobbying, Royal Mail has succeeded in securing regulatory reform that will allow it to end Saturday deliveries of second class letters, an estimated cost saving between £250 million and £425 million per annum. Parcel automation now covers 90 percent of Royal Mail’s operations, up from 50 percent in 2022, with major hubs in Daventry and Warrington able to process up to 1.5 million parcels each day.

The group has rapidly expanded its out of home network to nearly 24,000 sites, including 11,500 Post Office branches, a growing footprint of branded lockers and new partnerships with Sainsburys and the Co operative Group. GLS extended its network to over 110,000 out of home access points and more than doubled its locker network to over 20,000.

Although profit margins remain paper thin at just 0.1 percent, group chief executive Martin Seidenberg described the results as an important milestone and a key indicator of the company’s turnaround. The business now faces the challenge of absorbing a £120 million rise in employer national insurance contributions, a change that will slow recovery but is not viewed as a threat to overall sustainability. With trade union relations repaired and a new owner backing the management’s strategy, Royal Mail appears well placed to maintain forward momentum and deliver sustainable profit in the years ahead.