The parent company of Royal Mail, has reported an increase in revenues and earnings for its UK postal division, despite facing significant rises in staff costs due to the government’s job tax hike.
International Distribution Services (IDS), which was acquired last year by Czech billionaire Daniel Kretinsky, saw Royal Mail’s underlying earnings climb to £5 million in the year ending 31 March, a notable rise from £2 million in the previous year.
This improvement came as revenues for the UK arm grew by 2.6 per cent to £8.4 billion, even with increased national insurance contributions.
The prior year’s figures had also benefited from a surge in letter mailings related to the 2024 general election.
However, the broader IDS group experienced a substantial downturn, with overall earnings plummeting by a fifth to £222 million.
This decline was primarily attributed to its GLS parcel arm, which contended with new regulatory changes in Italy and a challenging trading environment across Canada.
GLS’s earnings specifically fell by 17.1 per cent to £237 million over the year. While the group reported a 7 per cent increase in parcel volumes, reaching 1.4 billion, the number of addressed letters continued its decline, falling by 10 per cent to 5.7 billion.
It said the decline reinforced the need to overhaul the universal service.
Royal Mail is pressing ahead with the roll-out of changes nationwide that will see second class post delivered every other weekday, with the Saturday service being scrapped across the UK.
It comes after an agreement with trade unions, which had been holding up the extension of the changes across its full network of around 1,200 delivery offices.
Royal Mail is under increasing pressure to improve service levels, with regulator Ofcom launching an investigation earlier this month into the firm’s failure to meet its delivery targets over the past year.
Royal Mail revealed in May it had missed targets for another year running, achieving 75.7 per cent of first class mail arriving the next working day over the 12 months to the end of March and 90.2 per cent of second class mail delivered within three working days.
It was fined a record £21 million by Ofcom in October last year for missing targets in 2024-25.
Martin Seidenberg, group chief executive at IDS, said: “Following Royal Mail’s agreement with the unions we are rolling out universal service changes across the UK which will lead to a more efficient, reliable and sustainable service for our customers.
“GLS continues to grow revenue and parcel volumes despite challenging conditions in parts of Europe, underlining the resilience of the group and the strength of our international network.”
IDS said it is continuing to ramp up its network of parcel lockers to capitalise on booming ecommerce and marketplace sales, with out-of-home parcel volumes up 40 per cent over the year for Royal Mail.
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