Royal Mail is facing a difficult time as demand for epidemic parcels is declining

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(Bloomberg) – Royal Mail plc saw sales decline next year as British companies posted less Covid-19 test kits and reduced the number of parcels as buyers returned to the store.

The historic service said the changing environment means cost savings need to be accelerated, according to a statement on Thursday. For the year ending March 27, parcel volume was 31% higher than the pre-epidemic period but accounted for about 7% of the total package sent test kits, while address letters continued their decline in volumes.

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“We’re at a turning point with the conversion to Royal Mail,” said Chairman Keith Williams. “We need to adapt our business to a post-epidemic world and while we are making progress in some areas, we need to do more in others.”

Wage inflation, sharp rise in fuel and fuel costs, and cost of living create uncertainty for businesses entering the new financial year, the Royal Mail reported. Covid-19 boosts parcel volume from online shopping and test kits and the business is still suffering from epidemic-related costs and inefficiencies.

The company will have to agree to a wage agreement with both its unions this year, with a 1% pay increase for members of the Communication Workers’ Union equivalent to 45 45 million ($ 55.6 million) inflation. Assuming a deal could be agreed, the current consistent operating profit of 30 303 million for the coming year could be agreed but with “negative risks,” the company said.

Full-year consistent operating profit was 8 758 million, missing analyst estimates. Royal Mail’s revenue fell 1.6% year-over-year.

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