£1bn losses at Royal Mail

GCA survey extended as postal boss looks for ‘strong greeting card sector’ amid turnaround hopes


As Royal Mail’s £1billion losses for the year were revealed, the company has told the GCA it “wants to see a strong, successful greeting card sector in the UK” – and the deadline for association members to respond to the survey on the postal service’s performance has been extended.

The comment from David Gold, Royal Mail’s director of external affairs and policy, came yesterday, 18 May, as parent company International Distribution Services (IDS) unveiled its full-year figures, blaming the postal service’s performance for the reported £748million in annual operating losses.

Above & top: GCA ceo Amanda Fergusson with Royal Mail’s David Gold
Above & top: GCA ceo Amanda Fergusson with Royal Mail’s David Gold

GCA ceo Amanda Fergusson is in ongoing talks with Royal Mail, which includes commissioning the survey to gain industry feedback is needed to boost the industry association’s case for lobbying the government over the impact of the current issues with postal service on everyone involved in producing and retailing greeting cards as well as the general public who enjoy sending and receiving them.

The seven-question survey was due to end today, 19 May, but the building response and report of the company’s huge losses have led the GCA to extend the deadline to 5 June, and the association’s Royal Mail sub-committee lead David Falkner, director of Cardology, added: “There is no bigger single issue affecting our industry than our end customers’ ability to send the cards they’ve purchased. If last Christmas taught us anything, it was that we shouldn’t take this ability for granted.”

Above: Yesterday’s figures make grim reading
Above: Yesterday’s figures make grim reading

With watchdog Ofcom announcing a further investigation into Royal Mail’s performance over 2022-2023, David Gold reaffirmed with Amanda yesterday: “We want to see a strong, successful greeting card sector in the UK. We love delivering cards and letters and we know how much people enjoy receiving them through their letterbox, especially when delivered by their local postie.

“Royal Mail is embarking on the biggest transformation programme in our five centuries of delivering the mail. Our aim is to improve our quality of service; to give our customers more of the services they want at a price they can afford; and to ensure that the Universal Service remains sustainable for the future.

“We know recent times have been tough, and you need to be able to rely on us. We value our relationship with the GCA and appreciate their engagement with us. Let’s keep working together to achieve our common goal.”

It came after IDS’ announcement of the figures for the year to the end of March 2023 following multiple strikes by postal staff and revelations of poor performance – with a confirmation of the decline in letter sending at 5.7% down from 2022 to 2023, and 12.9% lower since 2020..

Above: Letter sending is slowly declining while more parcels are being delivered
Above: Letter sending is slowly declining while more parcels are being delivered

The group reported operating loss of £748m compared to the previous year’s £577m profit was comprised of loss in Royal Mail of £1,044m, which banked a £250m profit in the 12 months prior, and a £296m profit by Amsterdam-based logistics arm GLS, down from its £327m profit in 2021-2022.

The report stated Royal Mail’s adjusted operating loss of £419m (2021-22: £416m profit) was “due to industrial action, inability to deliver the in-year benefits of planned productivity improvements, lower test kit volumes and a weaker online retail market, partly offset by successful management actions to reduce costs and right size the business in the second half of the year”.

IDS also booked a £539m write-down on the value of Royal Mail due to the impact of strikes and the “current risk backdrop”.

However, the company said Royal Mail is “delivering on change” with good progress on its five-point plan including a 10,000 reduction in fill-time equivalent staff at the end of March 2023, exceeding the 5,000 target to deliver £150m benefit in the current financial year.

Above: Royal Mail’s Keith Williams says there is a clear path to improvement
Above: Royal Mail’s Keith Williams says there is a clear path to improvement

It added: “Pay & Change agreement ratified by CWU Postal Executive Committee and recommended to members. Creates platform for the next phase of stabilising the business whilst continuing to drive efficiency and change, improve quality of service.”

Keith Williams, Royal Mail’s independent non-executive chairman, commented: “I said before that we had reached a crossroads at Royal Mail. Now that we have a negotiators’ agreement with CWU that will shortly go out to ballot, and thanks to the good progress made on our five-point plan to stabilise Royal Mail, our destination is coming into sight.

“There is now a clear path towards a more competitive and profitable Royal Mail, delivering improved services for our customers while 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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