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TOP NEWS: IDS says Royal Mail on the right trajectory as loss narrows

Fri, 24th May 2024 19:04

(Alliance News) - Royal Mail owner International Distribution Services PLC on Friday said "positive momentum is building" as it reported an improvement in its financial fortunes.

In the 53 weeks to March 31, the London-based firm, which also owns Global Logistical Services, the international parcel delivery business, reported a pretax loss of GBP75 million, narrowed from GBP110 million a year prior.

IDS, which is a takeover target for Czech billionaire Daniel Kretinsky, posted an operating profit of GBP26 million swinging from a GBP742 million loss a year ago.

Last year's figure included an impairment charge of GBP539 million on the carrying value of Royal Mail.

On an adjusted basis, the operating loss narrowed to GBP28 million from GBP71 million.

This was driven by revenue growth and reduced losses in Royal Mail, IDS said.

GLS reported an adjusted operating profit of GBP320 million down from GBP348 million a year prior. At Royal Mail the adjusted loss narrowed to GBP348 million from GBP419 million.

Revenue rose to GBP12.68 billion from GBP12.04 billion. Royal Mail revenue climbed to GBP7.83 billion from GBP7.41 billion and GLS revenue increased to GBP4.87 billion from GBP4.65 billion.

At Royal Mail, IDS highlighted strong letter revenue growth and parcels recovery in second half. It said Royal Mail was close to breakeven in the second half at an adjusted operating level, excluding voluntary redundancy charges.

GLS revenue growth and adjusted operating profit were at the upper end of guidance, IDS added.

Chief Executive Martin Seidenberg said it was a "good performance" during the year in a "challenging macroeconomic" environment.

"In the last six months we have set Royal Mail on the right trajectory. We made good progress delivering our modernisation agenda and returned to growth in the second half. We have improved quality, won back customers lost during industrial action, controlled costs and delivered Christmas for our customers. Positive momentum is building, although there is hard work in front of us to get back to profitability."

Seidenberg said the "transformation" of Royal Mail must be supported by Universal Service reform.

"Our proposal to Ofcom would deliver a more efficient, more reliable and more financially sustainable service, whilst protecting what matters most to customers. The need for reform is urgent and these changes, which do not require legislative change, should be enacted quickly by Ofcom. They just need to get on with it," he stated.

Royal Mail, which was privatised in 2013, put forward plans to Ofcom earlier this month to scrap second-class letter deliveries on Saturdays and cut the service to every other weekday as part of overhaul efforts.

In its submission to Ofcom's consultation on the future of the universal postal service, Royal Mail said it would keep a six-day-a-week service for first-class mail in a climbdown on previous calls for all Saturday letter deliveries to be scrapped.

IDS reiterated it was minded to recommend the revised offer of 370 pence per share from Kretinsky's EP Corporate Group AS to IDS shareholders should an offer be made at that level.

Kretinsky has until next week Wednesday to make a firm offer after the City Takeover Panel agreed to extend the so-called "put up or shut up" deadline, which was originally set for May 15.

IDS said it would pay a special dividend of 8p per share, if the deal with EP Group completes.

It also declared a final dividend of 2p per share. No dividend was paid last year.

Shares in IDS rose 1.6% to 319.80p each in London on Friday.

The release of the results was delayed from Thursday after its auditor KPMG requested additional time to complete the usual standard procedures, noting that their internal reviews were late in the audit timetable.

By Jeremy Cutler, Alliance News reporter

Comments and questions to newsroom@alliancenews.com

Copyright 2024 Alliance News Ltd. All Rights Reserved.

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