By GB News (Politics) | Created at 2026-06-24 14:16:24 | Updated at 2026-06-24 16:01:05
2 hours ago
Royal Mail's profits almost halved in the year to March after rising employment costs, declining letter volumes and a £133million increase in costs linked to changes in national insurance contributions weighed on earnings.
Parent company International Distribution Services (IDS) reported that operating profits at Royal Mail fell to £96million from £198million in the previous financial year.
The company said the increase in employer national insurance contributions announced by Chancellor Rachel Reeves added £133million to costs.
Letter volumes continued to decline, falling 10 per cent to 5.7 billion items as customers increasingly switched to digital communication and faced higher stamp prices.
Employee costs rose by 5.5 per cent during the year, reflecting a 4.2 per cent pay increase for frontline workers as well as higher tax costs.
IDS also noted that results in the previous year benefited from increased mail volumes generated by the 2024 General Election campaign.
Despite the decline in profits, IDS chief executive Martin Seidenberg received total remuneration of £6.9million in the year to March.
The package, which included salary, bonuses and long-term incentive awards, was more than three times higher than the £2.1million he received in the previous year.
According to the IDS annual report, the increase was largely driven by deferred share awards that vested following the completion of Czech billionaire Daniel Kretinsky's £3.6billion takeover of the company through EP Group.
Royal Mail profits fall to £96million after £133million national insurance hit and declining letter volumes
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The report stated: "The vesting of awards was accelerated at the point of takeover."
IDS added that no long-term incentive plan awards vested during the 2024-25 financial year, which "explains the increase in emoluments of the highest-paid director."
Parcel deliveries provided some support for the business, with volumes increasing seven per cent to 1.4 billion items as online shopping activity remained strong.
Out-of-home parcel collections rose by 40 per cent after IDS expanded its network of parcel lockers to meet growing ecommerce demand.
However, Royal Mail's revenues increased by just 2.6 per cent to £8.4billion, which the company said was insufficient to offset rising costs
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Across the wider IDS group, underlying earnings fell by a fifth to £222million.
The international GLS parcel business reported a 17.1 per cent decline in earnings to £237million, which IDS attributed to regulatory changes in Italy and challenging market conditions in Canada.
Group pre-tax profits dropped by more than two-thirds to £141million from £429million a year earlier.
Royal Mail is also facing increased scrutiny from Ofcom after the regulator launched an investigation this month into the company's failure to meet delivery performance targets.
Figures published in May showed Royal Mail missed its targets for another consecutive year, with 75.7 per cent of first class letters arriving the next working day and 90.2 per cent of second class mail delivered within three days.
Ofcom imposed a record £21million fine on the company in October after it failed to meet delivery standards during the 2024-25 financial year.
Royal Mail is now implementing changes to its universal service following an agreement with trade unions, including ending Saturday deliveries for second class post and introducing alternate weekday deliveries across its network of around 1,200 delivery offices.
Martin Seidenberg, CEO of the Royal Mail, said: "Following Royal Mail's agreement with the unions, we are rolling out universal service changes across the UK which will lead to a more efficient, reliable and sustainable service for our customers."
