Royal Mail causes an annual loss of one billion pounds sterling | Business news

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The company’s chairman says improving customer service is its top priority after a horror show of business in the UK over the past financial year.

By James Sellars, Business Correspondent @SkyNewsBiz

Thursday, May 18, 2023, 07:56, UK

Royal Mail’s parent company reported an annual operating loss of £748m, driven by the crisis within the UK business which has been plagued by strikes and poor performance.

International Distribution Services (IDS) blamed Royal Mail squarely, which was in the red with just over £1 billion in the 12 months to 26 March.

His efforts to boost the competitiveness of package deliveries in return for a higher pay rise fell flat against unionized front-line employees who had been at odds with their bosses throughout the period.

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The Royal Mail said a year-long conflict with the Communications Workers Union (CWU), which culminated in a Christmas base season wracked by industrial strikes, had cost it £200m.

A settlement reached in the new year was recommended by the union to its 112,000 members in April.

Earlier this month, CEO Simon Thompson resigned. The CWU blamed him for the financial hit of the industrial strike.

He had been in talks to leave the company after deputies impugned his credibility and called him in for questioning at the Committee on Business, Energy and Industrial Strategies (BEIS).

He was accused of presenting “inconsistencies” in the evidence before the commission, including with regard to monitoring staff performance.

Royal Mail has also since admitted it could face another fine from the industry regulator for missing key delivery targets.

A ransomware ring linked to Russia was responsible for harming Royal Mail’s operational performance.

A cyberattack halted international mail deliveries for weeks and it took months for the company to recover.

While the main operating losses attracted attention, the bottom line performed better than the market had expected with adjusted losses coming in at £419m.

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The Group adjusted operating loss of £71m compared to a profit of £758m in 2021/22.

IDS said Royal Mail would remain in the red, on the same basis, in the current financial year.

Chairman Keith Williams said: “There is now a clear path towards a more competitive and profitable Royal Mail, where we deliver improved services to our customers while further reducing our environmental impact.

“Importantly, if ratified, the CWU agreement provides greater job security and increased rewards – through both wages and profit share – for our employees. Successful delivery of the agreement will be key.

“Quality of service has been significantly affected by industrial action and high levels of absenteeism. I am sorry that we did not deliver the high standards of service our customers have come to expect. Improving service quality is our top priority.”

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