15th May 2020 09:04
(Alliance News) - Royal Mail PLC on Friday reported the abrupt departure of Chief Executive Officer Rico Back and said that it has seen a substantial switch to parcels from letters in the UK during the Covid-19 pandemic.
Shares in the company were down 1.5% at 159.90 pence each in London.
"The board and Rico Back have agreed he will step down as group CEO and from the group board with immediate effect, and leave Royal Mail on August 15, 2020," the 504-year old British postal company said.
Back, who has been criticised for managing the UK business from his home in Switzerland during the virus crisis, started his career with Royal Mail in 1989 and assumed the CEO role in June 2018.
The FTSE 250-listed company has appointed Non-Executive Chair Keith Williams as interim executive chair.
Stuart Simpson, currently chief financial officer and chief operating officer, has been named interim CEO of Royal Mail's UK parcels, international & letters, or UKPIL, business. Deputy CFO Mick Jeavons has been roped in as interim group CFO.
"We will conduct a comprehensive internal and external search for a permanent CEO of Royal Mail (UKPIL). In order to ensure greater focus, this permanent CEO of Royal Mail (UKPIL) will report directly to the board once Keith Williams returns to his chair's role," the company said.
As part of cash conservation measures, Royal Mail has cancelled bonuses for executive directors for 2019-20. It, however, has set aside GBP25 million for rewarding its frontline staff in recognition of their role making deliveries during the Covid-19 pandemic.
In the period to May 3 from March 30, Royal Mail processed 308 million fewer addressed letters, which were offset by 36 million more parcels.
Parcels volumes in the UK during the period surged 31%, with a consequent 20% rise in revenue.
The company's core UKPIL unit saw a GBP40 million rise in costs due to "overtime and agency resource costs due to high levels of absence, the introduction of social distancing measures and PPE". Year-on-year, UKPIL revenue was down GBP22 million in the month April.
On staff absences, the company said UK absences have fallen to 11% currently from from a peak of over 20%.
Royal Mail, which has over 150,000 employees, has placed fewer than 200 people on the UK government's furlough scheme.
The situation at the company's international business, General Logistics Systems, is still evolving, the company said.
Royal Mail said its liquidity position remains strong, with total liquidity, including undrawn facilities, of around GBP1.8 billion. The company also has the option to access the UK government's Covid Corporate Financing Facility, if required.
By Tapan Panchal; [email protected]
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