Royal Mail’s parent firm has reported £748m in annual operating losses, driven by the crisis within the UK business that was dogged by strikes and poor performance.
International Distributions Services (IDS) laid the blame squarely at the foot of Royal Mail, which was in the red to the tune of just over £1bn during the 12 months to 26 March.
Its efforts to bolster parcel delivery competitiveness in return for a higher pay rise fell foul of its unionised frontline staff who were at loggerheads with bosses throughout the period.
Royal Mail said the year-long conflict with the Communication Workers Union (CWU), which culminated in its core Christmas season being largely destroyed by industrial action, cost it £200m.
A settlement was reached in the New Year which the union recommended to its 112,000 members in April.
Earlier this month, Chief Executive Simon Thompson quit. The CWU had laid the blame on him for the financial hit of industrial action.
He had been in talks to leave the company after his credibility was challenged by MPs who recalled him for questioning at the Business, Energy and Industrial Strategy (BEIS) committee.
He was accused of giving “inconsistencies” in evidence before the committee, including over the monitoring of staff performance.
Royal Mail has also since admitted it may face another fine from the industry regulator for missing key delivery targets.
A ransomware gang linked to Russia was responsible for hurting Royal Mail’s operational performance.
A cyber attack suspended international postal deliveries for weeks and took the company months to recover.
While the headline operating loss grabbed attention, the bottom line performance was better than the market had anticipated as adjusted losses came in at £419m.
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A group adjusted operating loss of £71m compared with a profit of £758m in 2021/22.
IDS said Royal Mail would remain in the red, on the same basis, in the current financial year.
Chairman Keith Williams said: “There is now a clear path towards a more competitive and profitable Royal Mail, delivering improved services for our customers whilst further reducing our environmental impact.
“Importantly, if ratified, the CWU agreement provides greater job security and increased rewards – through both pay and profit share – for our employees. Successful delivery of the agreement will be key.
“Quality of service has been significantly affected by industrial action and high levels of absence. I am sorry that we have not delivered the high standards of service our customers expect. Improving quality of service is our top priority.”
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