// Royal Mail posts a slump in sales, warning that disputes with workers are holding up turnaround plans
// Royal Mail revenues fell by 11.5% to £1.88 billion over the quarter, compared with the same period last year
The boss of Royal Mail has said disputes with unions over job cuts and pay have stalled transformation plans but stressed the company is still open to talks with unions.
Royal Mail Group chiefs said the postal service was haemorrhaging £1m a day today as revenues across the business fell 5.1%, warning shareholders that weaker parcel demand and “stalled” cost savings will weigh on its outlook for the year.
Chairman Keith Williams blamed the slump on a decline in parcel volumes and a lack of progress in “delivering efficiencies”, and said “the pandemic boom in parcel volumes bolstered by the delivery of (COVID-19) test kits and parcels is over.”
“Royal Mail is currently losing £1m per day and the efficiency improvements which are needed for long-term success have stalled,” said Williams.
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Royal Mail revenues fell by 11.5% to £1.88 billion over the quarter, compared with the same period last year.
It comes a day after over 115,000 postal workers at Royal Mail voted to strike over pay in what is expected to be the biggest industrial action of the summer.
Ahead of its AGM today, Royal Mail chief executive Simon Thompson said the dispute has stopped Royal Mail from bringing in changes it needs to fulfil its £350m cost efficiency programme, adding that there “is now a risk worth £100m”.
Thompson said: “I am ready to talk about pay and change at any time. But it has to be both.
“When we previously spoke to the unions we said there needed to be an improvement in productivity, but it has not gone forwards but backwards.
“Without change this will continue, and obviously we do have concerns over the impact from yesterday’s CWU announcement.”
However, the business said other cost savings are “on track”, such as through infrastructure changes, although it also saw headwinds from Covid-19 absences.
Royal Mail also confirmed that it posted an adjusted operated loss of £92 million for the three months to the end of June after lower volumes.
“We have advantages in scale and reach and a strong balance sheet and asset base which are the foundations for a successful future,” said Williams.
“We need to act now in moving to that future in the interests of all stakeholders, employing those advantages to the maximum.”
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