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Growth of online shopping means Royal Mail makes more from delivering parcels than letters for the first time

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Royal Mail today said it was now making more revenue from delivering parcels than letters thanks to the growth of online shopping during the Covid-19 pandemic.

Sixty per cent of its total revenue was from parcels in the first half of its financial year – up from 47% a year earlier. That helped to lift Royal Mail revenue by nearly 5% in the first half. But the increased costs of handling parcels – and of doing so in a Covid-19 secure way – has hit its bottom line. 

Keith Williams interim executive chair of Royal Mail, says: “The growth in online shopping and parcels during the pandemic, combined with our increased focus on delivering more of what customers want, has led to revenue growth of nearly 10% for the group in the first half, with Royal Mail revenue up nearly 5%.”

He adds: “We have been pushing forward with our transformation in Royal Mail and delivering more new innovations, products and services for our customers. Whilst we have done exceptionally well in terms of revenue and have seen real growth for the first time since privatisation, we have recorded a first half adjusted operating loss of £129 million after restructuring charges of £147 million, and a reported operating loss of £176 million. As anticipated the reduction in letter volumes has had a significant impact on the regulated business which lost £180 million in the first half, and demonstrates the need for change in the Universal Service.”

The Royal Mail Group today reported revenue of £5.7bn (+9.8%) and a pre-tax profit of £17m in the six months to the end of September. Within that, Royal Mail reported a pre-tax loss of £133m on sales of £3.8bn (+4.9%), but its sister company GLS reported a pre-tax profit of £150m on sales of £1.9bn (+21.7%), resulting in a group profit of £17m. 

Royal Mail innovations include a Parcel Collect pick-up service, that sees enables senders to pay for parcel collections from their home or nominated safe place. Since the service was launched in October, more than 76,000 items have been booked in for collection. A new inflight redirections service means customers can change their delivery time and location while it’s on its way to them.  Senders such as eBay sellers can also request age verification on the doorstep. 

The company is also committed to becoming a net zero carbon business by 2050. It is currently trialling an electric taxi van for parcel deliveries and is planning a hydrogen van trial in the second half of this year. 

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