Royal Mail, under the ownership of International Distributions Services (IDS), has reported a full-year loss of more than £1 billion. IDS revealed that Royal Mail

experienced an operating loss of £1.04 billion for the year ending March 26, compared to earnings of £250 million the previous year. On an underlying basis, Royal Mail's operating losses amounted to £419 million, contrasting with profits of £416 million in the previous year.

IDS attributed the significant losses to debilitating strike action, leading to a £539 million writedown on the value of Royal Mail due to the strikes' impact and the current risk environment. Additionally, the group suffered a loss of approximately £200 million from 18 days of strikes. A cyber attack in January further added to the financial strain, costing Royal Mail £20 million in lost revenues as international parcels were unable to be sent, causing delays for consumers and businesses.

IDS, as a whole, reported an annual operating loss of £748 million, compared to profits of £577 million the previous year. However, IDS aims to achieve a return to underlying earnings by 2023-24.

Despite reaching a recent agreement with the Communication Workers Union (CWU) on a 10% salary increase and a one-off £500 payment for staff, Royal Mail continues to face challenges. CEO Simon Thompson's announcement of stepping down by year-end and an ongoing investigation into Royal Mail's failure to meet delivery targets in the past year contribute to the company's turbulent circumstances.

IDS Chairman Keith Williams expressed apologies for failing to deliver a satisfactory quality of service and acknowledged the difficulties faced by Royal Mail's customers, employees, and shareholders. Williams emphasized the commitment to improving service quality and meeting customer expectations.

While strikes did impact performance, Williams believes there are reasons for optimism, anticipating a return to profitability for Royal Mail in 2024-25 following the agreement with the CWU. The agreement will also enable staff participation in a profit-sharing scheme in that year.

Matt Britzman, an equity analyst at Hargreaves Lansdown, commented that Royal Mail's results reflect the extensive damage caused by 18 days of strikes and a challenging macro environment. However, he noted that performance was not as dire as analysts had predicted, and the agreement with the union on pay eliminates the lingering threat of further strike action pending the union members' vote. Photo by Dickelbers, Wikimedia commons.