Jul 17, 2018
Royal Mail boss needs to earn his next congratulatory telegram
In Tuesday's first quarter trading update, the company warned that caution over data usage could mean letter volumes fall more than the 4 per cent to 6 per cent forecast. Retailers' use of tracked dispatch and tracked return services increased 24 per cent in the period, pushing total parcel volumes up 7 per cent. With the GLS European logistics business increasing revenues 11 per cent, that meant group revenue was up 2 per cent on last year. Having agreed that pension deal, plus a 5 per cent pay rise and one-hour cut in the working week, Royal Mail needs to deliver efficiency savings to keep those revenues profitable. According to analysts at RBC, labour costs per hour will rise 3.8 per cent this year and 4.6 per cent in 2019/20, requiring savings or gains to offset costs it deems "Equivalent to 65 per cent of UK [division] sales".
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