Royal Mail profits QUADRUPLED to £762million last year as Covid lockdown sparked surge in online shopping

• Bosses revealed revenues for the year to March went up 16.6 per cent to £12.6bn
• The former state-owned service added that parcel revenues rose 38.7 per cent
• Its European and US parcel business GLS also had global boost from pandemic
• It follows revelation it produced more cash from parcels than letters for first time

Royal Mail saw profits quadruple to £762million last year as the Covid-19 lockdown sparked a surge in online shopping.

Bosses revealed pre-tax profits for the year to March hit £726million – up from £180million a year earlier – with revenues up 16.6 per cent to £12.6billion.

The former state-owned service added that parcel revenues rose 38.7 per cent, offsetting a 12.5 per cent fall in letters being sent.

A 10p-a-share end-of-year dividend for shareholders was declared and the company said it was confident it could keep paying out future dividends of 20p-a-share from next year.

Royal Mail’s shift away from letters to focus on parcels was confirmed as the company revealed it generated more cash from parcel deliveries than letters for the first time in its history.

Royal Mail saw profits quadruple to £762million last year as the Covid-19 lockdown sparked a surge in online shopping. Pictured: a Royal Mail postal worker walks past a pub in York during the first nationwide lockdown in March last year

Parcels now account for 72 per cent of revenues. Its European and US parcel business GLS also enjoyed a boost from the pandemic globally, with its revenues up 27.8 per cent and more than half of its deliveries direct to consumers, compared with two-thirds coming from business-to-business customers.

Bosses added that despite the boosts in profits and revenues during the pandemic, they incurred significant additional costs due to Covid-19.

The company added that it does not expect the speed of parcel volumes to increase at the same levels once the pandemic is over but said it must be ready to capitalise on the shift to more online shopping.

It said: ‘Commercially we must adapt more quickly to the needs of customers and consumers, and finally deliver the long-promised changes on operational and cost transformation… Without these changes, we cannot be competitive into the future.’

Bosses revealed pre-tax profits for the year to March hit £726mil – up from £180mil a year earlier – with revenues up 16.6 per cent to £12.6billion (file photo of Royal Mail delivery vans)

Richard Hunter, Head of Markets at interactive investor, said: ‘The spike in volumes during the pandemic accelerated the trend away from letters and towards parcels at a pace which forced the transformation of the company at lightning speed.’

He added: ‘From here, Royal Mail is aware of the challenges which remain. 

‘The group will need to be alert to a particularly fierce level of competition in the parcels business, while it remains unclear how sustainable the current volumes are as customers have been driven to online shopping from their homes during the pandemic. 

‘At the same time, the effect on business volumes after the return to some kind of normality is also difficult to gauge, while hefty ongoing investment will be required to maintain progress so far.’

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