14th Oct 2022 09:27
(Alliance News) - International Distributions Services PLC on Friday said "significant and urgent" change was needed at Royal Mail, as it swung to a first-half loss in the wake of ongoing industrial action.
The company plans to cut between 5,000 and 10,000 Royal Mail jobs between March and August 2023 to reduce costs.
Royal Mail is the UK-focused division of International Distributions, a London-based multinational postal service and courier company. GLS is its Netherlands-based international division.
For the six months ended September 2022, Royal Mail reported revenue of GBP3.64 billion, down 11% from GBP4.07 billion a year prior.
Adjusted operating loss for the same period was GBP219 million, swung from a profit of GBP235.0 million.
The company said GBP70 million of the loss was a direct result of industrial action over 3 days.
To date, the Communication Workers Union have taken six days of action, with a further two days in October expected to go ahead.
Royal Mail members of the CWU voted by a 98% majority in a national ballot to strike for a pay rise that "fully addresses" the current cost of living.
They have also voted for action in defence of the "Pathway to Change" agreement signed, and reneged-upon, by Chief Executive Officer Simon Thompson.
IDS plans to cut costs through the reduction of around 5,000 full-time employees by March 2023, and 10,000 by the end of August on a rolling 12-month basis.
Based on current estimates, Royal Mail may need to undertake 6,000 redundancies by the end of August 2023.
"The financial position of the business means that our legacy voluntary redundancy policy, which offered up to two years' pay, is now unaffordable," it said.
It also warned of damage to the value of the Royal Mail business. The carrying value stood at GBP1.37 billion on March 27. For the full-year, IDS predicted a GBP350 million adjusted operating loss for Royal Mail, which could stretch as far as GBP450 million.
Outside of the UK, IDS said GLS remains on track to meet full year expectations of an adjusted operating profit between EUR370 million and EUR410 million.
IDS shares were trading 14% lower at 181.40 pence each in London on Friday morning.
By Holly Beveridge; [email protected]
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