Royal Mail Group chiefs said its flagship postal service was haemorrhaging £1m a day today as revenues across the group slumped 5.1 per cent in the first quarter of the year as the pandemic postal boom subsides.
Revenues at the flagship postal arm of the group plunged £92m to £1.88bn in the three months to June, which bosses said reflected a slowdown in retail trends and the delivery of covid test kits that buoyed performance through the pandemic, as well a longer term structural decline in letters.
Revenues across the group, including its Dutch logistics division GLS, fell to £2.99bn, down 5.1 per cent on last year but 14.1 per cent ahead of pre-pandemic levels.
Ahead of its AGM today, chiefs warned £100m of benefits that had been identified in its long term transformation plan for the postal division were now in jeopardy.
“The pandemic boom in parcel volumes bolstered by the delivery of test kits and parcels is over,” said Keith Williams, chair of Royal Mail Group.
“Royal Mail is currently losing one million pounds per day and the efficiency improvements which are needed for long term success have stalled.”
Bosses said the group had become increasingly reliant on GLS for returns – which saw a 7.5 per cent jump in revenues to £1.12bn – and they were now mulling a breakup of the two companies if the outlook fails to improve at Royal Mail.
“In the event that significant operational change within Royal Mail in the UK is not achieved, the Board will consider all options to protect the value and prospects of the Group, including separation of the two companies,” the firm said.
The update comes ahead of the group’s annual general meeting today, where shareholders will quiz bosses on the performance of the firm.
It comes as Royal Mail faces unrest from workers over pay and the looming threat of industrial action. Royal Mail avoided a three day strike from workers later this week after trade union Unite said on Monday that a ballot of workers showed a majority in favour of returning to negotiations.
“Unite’s members today have accepted the senior management’s return to the negotiating table to improve upon the jobs already put back into the crucial delivery and collections services,” Unite official Mike Eatwell said in a statement.