Recently privatised Royal Mail continues to struggle to adapt to the private market, cutting staff and overhauling the business in a bid to get itself of a sure footing.
The postal service on Thursday put out its half-year report, showing a dip in revenue from £4.4 billion ($US6.7 billion) to £4.3 billion ($US6.5 billion) and a fall in underlying operating profit from £279 million ($US426.2 million) to £208 million ($US317.7 million). One of the only bright spots is Royal Mail’s parcel delivery and logistics business GLS, which increased revenue by 8%.
Royal Mail is struggling with a decline in letter volumes, increased competition in the parcel market, and the legal requirement that it must deliver letters regularly to the whole of the UK, which ties its hands. CEO Moya Greene says the UK “continues to be a challenging market.”
Royal Mail is trying to double down on parcels, hoping the decline in letters will be made up for by the rise of e-commerce, but it said Thursday that Amazon’s recent roll-out of its own delivery network across the UK has reduced potential growth of the market by up to 2% a year.
Royal Mail is currently overhauling its business to try and reduce costs, and as part of that said goodbye to a crazy 3,000 staff in just the first half of the year.
Many of them took voluntary redundancy and this higher than expected uptake increased “transformation costs” by £47 million ($US71.8 million) in the first half of the year.
Royal Mail made cost cuttings of £200 million ($US305.5 million) over the last 2 years and is looking to cut a further £500 million ($US763.9 million) of annualised cost by 2018.
Christmas is now looming, a crucial period for Royal Mail and CEO Greene said in today’s statement:
Our performance over the Christmas period is critical. We are recruiting around 19,000 temporary staff, and opening ten parcel sort centres to manage increased traffic over this crucial period. We will also be extending opening hours in Enquiry Offices. We monitor retailing trends closely, including the increasing importance of Black Friday, in the run up to Christmas.
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