Royal Mail parcel revenue overtakes letters for first time

Royal Mail’s parcel revenue has overtaken its revenue from letters for the first time, reflecting growth in online shopping during the pandemic.

Parcels represented 60 per cent of total revenue for the half year ending 27 September, compared with 47 per cent in the previous period.

Growth in parcels contributed to an increased group revenue of £5.7bn, up 9.8 per cent from the same period last year. However, the group posted an operating loss of £20m for the period, compared with a profit of £61m for H1 2019/20.

Increased costs for Royal Mail included £85m in relation to Covid-19 and £147m on voluntary redundancies.

Keith Williams, interim executive chair, commented: “We have been pushing forward with our transformation in Royal Mail and delivering more new innovations, products and services for our customers.

“The level of revenue growth in the first half shows we have the right strategy and that Royal Mail can be cash generative and a sustainable, profitable business in the future. But we need to speed up the pace of change in order to create a profitable business in the UK.”

Mr Williams continued: “We are already working hard to deliver Christmas, recruiting around 33,000 additional flexible workers in Royal Mail over the peak season, and we continue to provide significant support to the Government’s COVID-19 testing programme and the distribution of protective equipment.”

Mr Williams said the group’s scenario for the full year had been updated with improved revenue performance. However, he added there remained uncertainty surrounding the developments of the pandemic and “further recessionary impacts”.

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