25th Jan 2022 17:44
(Alliance News) -Â Royal Mail PLC on Tuesday set out plans to streamline the business as it looks to build on strides made during the pandemic.
"For a few years Royal Mail PLC was delivering like the worst postie in the depot...Now, helped by the massive growth in parcels being sent during the pandemic, it finally seems to be getting its act together," said Russ Mould, investment director at AJ Bell.
The London-based postal service and courier company on Tuesday said its performance in October to December, its financial third quarter, was in line with expectations.
The company said revenue was down 2.4% to GBP3.55 billion from GBP3.64 billion in the same period the previous year. Royal Mail said this was "broadly" in line with its expectations.
Royal Mail handled 439 million parcels in the quarter. Domestic parcel volumes were down 7% on a year ago - a figure AJ Bell's Mould said "is only to be expected" given tough comparative figures.
"A year earlier nearly all retail stores were shuttered thanks to Covid restrictions, meaning demand for online orders soared," Mould observed.
Parcel volumes were a third above pre-virus levels, said Royal Mail, and even though volumes were down year-on-year it "at least" maintained its market share. Compared to pre-pandemic levels, domestic parcel revenue was up 44% - showing how Royal Mail has benefited from Covid lockdowns.
"Perhaps more important is the fact the company maintained its share of a highly competitive market and it remains confident that, as we emerge from the pandemic, the amount of parcels being sent will remain permanently higher, thanks to a structural shift in the way people buy goods," said Mould.
The company noted that staff absences due to the Omicron wave of Covid-19 peaked at 15,000 within the UK domestic operation in early January, hurting service levels in some areas of the country and slowing the realisation of planned cost efficiencies.
Royal Mail said it was entering into a formal consultation on a reorganisation to streamline operational management to improve focus on performance at a local level. The company expects this to deliver GBP40 million in annualised benefit.
Excluding the cost of the restructuring, Royal Mail expects full-year adjusted operating profit in life with previous guidance of GBP500 million, which would be up 40% from last year's GBP358 million. Royal Mail's financial year ends March 28.
Royal Mail shares closed 1.3% higher at 442.30 pence in London on Tuesday, the stock up 6.2% over the past 12 months.
By Lucy Heming;Â [email protected]
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