Royal Mail reports profit boost as Covid powers online delivery boom

Profits at Royal Mail have soared as the coronavirus pandemic drove a surge in demand for online deliveries.

Pretax profits jumped to £726 million in the 12 months to the end of March, up from £180 million the previous year.

Adjusted operating profit, meanwhile, rose to £702 from £325 million.

We have announced our Full Year results for 2020-21. Read more about our performance here: https://t.co/PQNy2aUO5L pic.twitter.com/yuSWLutg6w
— Royal Mail News (@royalmailnews) May 20, 2021

Revenue from parcel deliveries surpassed letters for the first time last year. Royal Mail parcels revenue increased by 38.7%, powered by the boom in e-commerce shopping, while letters revenues declined by 12.5%.

Keith Williams, Non-Executive Chair, comments: “The Group has delivered a pleasing set of results in what has been an unprecedented year. This is in no small part thanks to the dedication of our colleagues across the Group who have played a key role keeping people and businesses connected.”

He adds: “As the outlook for 2021-22 contains a number of uncertainties that could significantly influence volumes and costs it is difficult to provide specific guidance for 2021-22 for Royal Mail.”

“Instead we have provided information on costs and some sensitivities to assist in quantifying potential outcomes for the year ahead.”

“GLS (Royal Mail’s logistics firm) is expected to perform in line with the guidance given in March 2021. Despite this uncertainty, there are grounds for optimism. The opportunities are there. We must harness them.”

Staying competitive

James Andrews, Personal Finance Expert at money.co.uk, comments: “Although the past year has been phenomenal for Royal Mail, it still faces competition from the likes of Hermes and DPD.”

“It will need to continue to evolve to keep up with competitors. Amazon, for example, has quickly established an effective delivery service for the online age, while Royal Mail’s development has been slower as it seeks to change a company first set up hundreds of years ago.”

He adds: “As shoppers start to return to the high street this could affect online demand, so it will be down to Royal Mail to offer a tight service to keep their customers interested. Automation is high on the company’s list to implement agile working and cost savings needed to stay competitive.”

“But while there are challenges ahead, there are also opportunities to be grasped as more and more of our shopping comes through the post - with none of the competition able to match the sheer scale of the Royal Mail’s pick up and delivery network.”