Royal Mail’s annual profits quadrupled in its latest financial year as the pandemic-fuelled online shopping boom provided a surge in demand for parcel deliveries and triggered a turnaround in the company’s fortunes.
Pre-tax profit jumped to £726m in the year to 28 March, compared with a profit of £180m a year earlier.
“This time last year we expected the UK business to be loss-making,” said Simon Thompson, chief executive at Royal Mail. “A lot has changed in a year.”
The company, whose former chief executive Rico Back resigned last March as management battled unions over a £1.8bn plan to revive the company’s fortunes, has proved to be one of the major winners of the pandemic online shopping boom.
Revenues were up 16.6% to £12.6bn and the performance was driven by a 39% increase in parcels revenue, which more than offset a 12.5% decline in revenues from its letters delivery operation.
The performance of the company, which has seen its market value triple to £5.2bn over the last year, prompted a one-off 10p dividend payment, the first since January last year. Royal Mail also said that it is to introduce a new dividend policy at 20p a share from this financial year.
“Last year stood out as one of remarkable change at Royal Mail,” said Thompson. “It has been challenging at times but we have learnt that we can deliver results and change at lightning pace when we are united by a common purpose.”
Royal Mail, which is tipped to make a return to the FTSE 100 in next month’s quarterly market value-based reshuffle, said that trading remained strong in April, the first month of its new financial year. Revenues climbed 24% year-on-year, with parcel volumes falling 2% but addressed letter delivery up a quarter.
The company said it was difficult to give guidance on financial prospects for the current year because of “significant short-term uncertainty” over public health, and economic growth.
In December, the company, which said it cut 2,000 managerial roles in the last year, ended a two-year dispute with workers over pay, hours and job security.