Royal Mail ‘at crossroads’ as pandemic parcel boom fades

theguardian.com:

Royal Mail has warned that the company is at a “crossroads” and needs to urgently adapt to the post-pandemic environment as parcel deliveries, originally boosted by Covid lockdowns, continue to wane.

It piles further pressure on the postal company, as it struggles to reach a pay deal with unionised staff who are pushing for an inflation-based pay rise as the cost of living soars.

Royal Mail said on Thursday it suffered an 8.8% drop in annual pre-tax profits to £662m, explaining that revenues were flat as the easing of Covid restrictions reduced demand for parcel deliveries. The drop was partially offset by the distribution of Covid test kits, but overall, parcel demand across the UK fell 7% year-on-year.

Chairman Keith Williams admitted that the financial tailwinds of the pandemic “are now dissipating” and that the company was steeling itself for a drop in economic growth and higher inflation that could pose challenges for both its UK and international delivery business.

“We are at a crossroads with the transformation of Royal Mail,” he said. “We need to adapt our business to a post-pandemic world and whilst we are making progress in some areas, more needs to be done in others”.

The news sent shares down nearly 10% on Thursday morning, wiping nearly £400m off the company’s value and making Royal Mail the biggest faller on the FTSE 100.

The courier also faces an ongoing pay claim with staff represented by the Communication Workers Union (CWU), which said Royal Mail’s full-year profits were “earned off the backs of our members hard work”.