Royal Mail profits more than halve

Royal Mail’s new boss, Rico Back, has pledged action to boost the group’s performance including a review of its under-pressure UK postal network as it revealed a sharp fall in profits.

Pre-tax profit more than halved from £77 million to £33m for the six months to September 23 despite a 1% rise in revenues to just over £4.9 billion.

Revenue from its GLS European parcel operations was up 9%, offsetting a 1% fall in the UK parcels and letters.

Mr Back said it had been a “challenging” past few months, adding he was “disappointed” with the group’s performance.

He vowed to turn around the firm’s performance, saying the group was reviewing its UK network, reining in costs and boosting flagging productivity.

He said: “There will be a greater emphasis on how we connect customers, companies and countries through our domestic and international businesses.

“There will be a clearer focus on financial performance and management accountability.

“In short, we as a management team are focused on pulling all the short and medium-term levers at our disposal to improve our performance.”

He will update on the plans in March.

On the UK network review, Mr Back said the group would look at increasing the use of automation “where appropriate” and making targeted investment as it looks to create a “modern, optimised, efficient network”.

But he said: “This is about getting the best from it. It is not about building a new network.”

Royal Mail’s GLS European parcels arm also saw underlying earnings drop, down to £77m from £90m a year ago, due to higher cost pressures.

Royal Mail shares fell 22.60p to close at 325.40p.