Evri profits slump 47% after £8m back pensions payments charge
The delivery company Evri, formerly known as Hermes, paid more than £8m in back pensions payments for more than 6,000 of its drivers last year after pressure from the retirement savings watchdog and the GMB union.
The pensions charge emerged in accounts filed at Companies House last week, showing profits slumped 47% to just under £81m, despite only a 1.4% fall in sales last year as shoppers returned to stores and ordered less stuff online.
The company said its profit figure was “a reasonable performance in the context of challenging trading conditions” but it skipped paying a dividend, after handing investors £150m a year before.
Evri said it had faced higher costs on energy, fuel and wages as well as “resource shortages” – understood to mean a lack of suitable drivers – but the volume of parcels it handled had remained steady year-on-year and was up 70% on pre-pandemic levels.
It won new business from rivals, and benefited from what it called “rapid growth” in the trade in secondhand goods via its partnerships with secondhand marketplaces Vinted and eBay as well as video sharing site TikTok. Evri also expanded internationally – in the US and mainland Europe.
Sales in the UK, Evri’s core market, slipped 1.4% to £1.43bn, but the company’s overseas sales more than doubled to £32.8m.
Evri said it had won business by helping clients caught out by Royal Mail strikes during the peak trading period in November and December last year when deliveries were also affected by poor weather.
“During the peak period we recognise there were times when our service was impacted in certain locations and fell short of the standards that we set ourselves,” it said in a strategy update in the accounts.
In its accounts, Evri warned that it expected the squeeze on consumer spending to continue through 2023 with the volume of goods sold likely to fall by 5%, according to analysts at GlobalData.
However, the company said that this year it was handling “record volumes – higher than at any point during Covid-19” with its business expanding by more than 10%.
Evri has invested £40m in its operations, including taking on 6,500 more people, as it plans to double in size over the next five years after opening a new distribution hub in Barnsley, South Yorkshire.
Evri now works with 20,000 drivers – all of whom are self-employed – and directly employs almost 7,700 people at its head offices and warehouses – about 400 more year-on-year.
More than half of its couriers have opted for its “self-employed-plus” (SEplus) model – a deal agreed with the GMB union in 2019 that includes paid holiday and guaranteed minimum hourly wages for drivers.
Since a court ruling in 2021 that found Uber drivers were not self
employed and therefore had pension rights, the Pensions Regulator has been encouraging gig economy companies to proactively enrol workers into pension schemes. Evri agreed to do so last year when it also began offering maternity and paternity leave to the majority of drivers.
Under the scheme, those on the SE-plus deal are automatically enrolled on the company pension with the employer contributing 3% of earnings and couriers a minimum of 5%. The workers are able to opt out should they wish to do so.
Evri set aside £15m for potential pension liabilities in 2022, but paid out a little over half that amount last year.
Andy Prendergast, GMB national secretary, said: “As part of the current pay negotiations – and in the event of a successful ballot – Evri has committed to a joint review with GMB of the current earnings model for couriers.
“If it does proceed then it is highly likely that future pension arrangements will also be raised by GMB as part of that process.”