A 30% slump in pre-tax profits is piling the pressure on Royal Mail and the CWU to bury the hatchet in the dispute over pensions, pay and jobs, or risk a disastrous Christmas which could send business into the arms of rivals.
Although both sides are now in external mediation, there is still a threat of strike action if the talks collapse, meaning that the company would not to be able to exploit the busiest time of the year for the postal market.
According to the postal operator’s interim results, pre-tax profit fell to £77m in the six months to September 24, led by a drop in profits in the UK Parcels, International and Letters (UKPIL) division.
The UKPIL arm’s revenue was flat at £3.6m, but operating profit declined from £247m to £233m with letter volumes dropping by 3%. This follows a 2% revenue decline in the UKPIL arm in 2016-17.
The company’s international performance came to the rescue, with its European parcels unit, General Logistics Systems (GLS), seeing a 9% increase in revenue, with operating profits growing from £73m to £90m, with volumes growing by 9%.
But chief executive Moya Greene admitted that the performance for the full year, as always, will be dependent on the important Christmas period.
She added: “We are now in external mediation with the CWU. Our priority is to reach agreement with the CWU to help underpin the sustainability of the business.”
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