Good performance against a challenging macroeconomic backdrop: Royal Mail returned to revenue growth in the second half; GLS continuing to build on its track record of growth and strategic delivery.

IDS overview:

  • Revenue £12,679 million, up £635 million year-on-year, driven by GLS and strong H2 in Royal Mail.
  • Reported operating profit of £26 million (2022-23: loss of £742 million); adjusted operating loss1 reduced to £28 million (2022-23: loss of £71 million).
  • Adjusted operating profit1 in GLS of £320 million and adjusted loss of £348 million in Royal Mail;
  • Excluding voluntary redundancy charges, Royal Mail adjusted operating loss1 was £336 million, broadly offset by GLS adjusted operating profit1, as expected.
  • Strong balance sheet retained with ample liquidity:
  • Dividend: final dividend proposed of 2.0p for 2023-24, funded by GLS, as previously indicated;
  • Royal Mail: crossed an inflection point, although headwinds remain

Strong letter revenue growth and parcels recovery in second half

  • Royal Mail close to breakeven in H2 at the adjusted operating level1, excluding voluntary redundancy charges.
  • Operational turnaround accelerating at pace:
  • Quality of service on positive trajectory across both commercial and Universal Service Obligation (USO) products, although still below USO targets, with more to do.
  • Modernisation agenda progressing: significant expansion of out-of-home footprint with new partnerships and plans to increase parcel drop off locations by more than 50% to 21,000; optimising and automating parcel hubs; delivering CWU agreement and productivity improvements; reducing CO2
  • No timetable as yet for reform of Universal Service: Royal Mail‘s proposal would:
  • Ensure a more efficient and financially sustainable Universal Service;
  • Maintain the one-price-goes-anywhere service for the entire UK;
  • Continue with six-days a week delivery for First Class letters;
  • Ofcom should act without delay.
  • Emma Gilthorpe joined on 1 May as Royal Mail Chief Executive Officer (CEO).

GLS: revenue growth and adjusted operating profit at upper end of guidance; continuing to invest to deliver on strategic priorities

Good revenue growth of 4.6% year-on-year driven by B2C and cross-border.
Investing to support strategic ambitions: expanding network capacity, launching two new hubs and investing in automation; parcel lockers grew by 53%.
Adjusted operating profit lower year-on-year, as expected, due to inflationary pressures not fully offset by pricing and efficiency measures, and impact of strategic investments.

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