Our opportunity

This afternoon, we will be holding our Annual General Meeting – an opportunity for us to update our shareholders on our performance and key issues for the business. 

Keith Williams, our interim executive chair, Royal Mail Group, said: 'I want to be transparent with our people about how the company is doing, so I am writing to update you at the same time.

‘While the current crisis has brought both additional challenges and extra costs to Royal Mail, the market changes accelerated by it have also offered us new opportunities.

‘As a business, we have tremendous opportunities in the rapidly growing customer demand for parcels – both big and small. However, we have allowed our legacy in letters to hold back operational changes, which we should have made long ago to anticipate a world with fewer letters and more parcels.’

Recent performance

‘That change has been accelerated and a new world is now with us,’ added Keith. ‘As you will have seen in offices throughout the UK, particularly since the arrival of Covid-19, parcel volumes are continuing to rise significantly.  

‘We are announcing today that they are in fact, up 34 per cent in the first five months of the year. Conversely, addressed letter volumes excluding elections are down 28 per cent – that’s over a billion fewer letters in the past five months alone, a staggering reduction.

‘Whilst the increased parcel volumes are good news, they cost more to deliver than letters. About £70 million more in the first five months. And we are also still facing increased estimated Covid- related costs too, such as the costs of social distancing, protective equipment, absences and overtime (around £75 million).

‘These trends may slow after the pandemic is over, but we do not expect them to reverse. As we had predicted previously, Royal Mail in the UK will make a substantial loss this year and we will not reach profitability – let alone an acceptable level of profitability, without substantial business change.

‘To put it simply, too many parcels are still sorted by hand and we are failing to adapt our business to fewer and fewer letters by holding on to outdated working practices and a delivery structure that no longer meets customer needs.’