Royal Mail’s new boss Rico Back has pledged action to boost the group’s performance including a review of its under-pressure UK postal network as it revealed a sharp fall in profits.
The firm reported a 27% plunge in pre-tax profits to £183 million for the six months to September 23.
Underlying earnings before costs of its ongoing overhaul were also sharply lower, down 25% to £242 million, with Royal Mail blaming lower UK revenues, poor productivity and lower-than-expected cost savings.
It comes weeks after Royal Mail warned that annual profits were expected to tumble by up to 28%, which sent shares tumbling to an all-time low.
Mr Back said it had been a “challenging” past few months, adding he was “disappointed” with the group’s performance.
But he vowed to turn around the firm’s performance, saying the group was reviewing its UK network, reining in costs and boosting flagging productivity.
He said: “There will be a greater emphasis on how we connect customers, companies and countries through our domestic and international businesses.
“There will be a clearer focus on financial performance and management accountability.
“In short, we as a management team are focused on pulling all the short and medium-term levers at our disposal to improve our performance.”
He will update on the overhaul plans in March.
On the UK network review, Mr Back said the group would look at increasing the use of automation “where appropriate” and making targeted investment as it looks to create a “modern, optimised, efficient network”.
But he said: “This is about getting the best from it. It is not about building a new network.”
The interim results showed profits more than halved on a statutory basis, to £33 million from £77 million a year earlier.
Royal Mail saw underlying earnings in its UK letters and parcels arm fall to £165 million from £233 million a year earlier after revenues dropped 1% to £3.6 billion.
Its General Logistics Systems (GLS) arm also saw underlying earnings drop, down to £77 million from £90 million a year ago as higher cost pressures offset a 9% jump in revenues.