Royal Mail Group reports operating profit of £311 million

Royal Mail Group has reported continued revenue momentum, reaching an operating profit of £311 million, up £331 million year on year, driven by recovery in profitability after the negative impact of COVID-19 pandemic and restructuring charges.

Revenues rose by 7% year-on-year to £6.1 billion. The group reported that it would return £400 million via a £200 million share buyback that will start immediately and a £200 million special dividend. It will also pay a £67 million interim dividend.

Domestic parcel volumes, excluding international business, increased by 33% compared to pre-COVID levels. The volume of letters rose 11% compared to 2020 but were still down 19% when compared to pre-COVID levels.

The group is also seeing benefits of actions on costs, reporting £56 million saved from management restructure and £42 million saved from non-people costs.

Simon Thompson, Chief Executive Officer of Royal Mail, said: “Re-invention of Royal Mail is inflight; we are making pleasing progress with our change agenda. We’re seeing the benefits of our programmes to reduce costs, and are developing our plans to address inflationary pressures which will impact next year and beyond. We’re also taking steps to equalise performance across our whole operation to ensure that our customers always get the great levels of service they expect from Royal Mail.

“The pandemic has resulted in a structural shift and accelerated the trends we have been seeing. Domestic parcel volumes, excluding international, are up around a third since the pandemic, whilst addressed letter volumes, excluding elections, are down around a fifth. This reaffirms that our strategy to rebalance our offering more towards parcels is the right one, and demonstrates the need to start defining what a sustainable Universal Service is for the future. I want to thank our teams for what we have delivered so far: it is an impressive start but there is still much more to do together.”