Royal Mail issues warning over cuts to second-class deliveries
Royal Mail’s owner, International Distribution Services (IDS), has confirmed that the nationwide axing of second-class letter deliveries on Saturdays will be a protracted process, taking “many months” to implement and extending well into 2026.
The announcement follows IDS’s recent £3.6 billion takeover by Czech billionaire Daniel Kretinsky’s EP Group in June.
Ofcom granted Royal Mail approval to scrap second-class Saturday deliveries and transition to an every-other-weekday service from July 28.
However, under its Universal Service Obligation, Royal Mail must maintain Monday to Saturday deliveries for first-class post and ensure second-class letters arrive within three working days.
Despite Royal Mail commencing “detailed work” and “using the learnings from pilots” for the nationwide rollout, the reforms have yet to expand beyond the 35 pilot delivery offices.
IDS chief executive Martin Seidenberg described the undertaking as a “massive task ahead of us”, underscoring the significant challenge of the transformation.
He said: “We will take the time to get this right.
“We owe it to our customers that we are not flipping back and forth.”
He added the group had “always said it would take many months”.
IDS said it was too early to say when the changes will be completed and which of its 1,200 delivery offices would be next in line for the overhaul.
“This is a massive change for us as a company and the people of the country,” he said, given the group’s 130,000 workforce and delivery network.
The comments came as Royal Mail revealed it returned to an underlying operating profit for the first time in three years despite a “competitive and challenging” backdrop.
In its first set of figures since being taken over by EP Group, IDS said Royal Mail delivered underlying earnings, excluding voluntary redundancy costs, of £12 million for the year to March 31 compared with losses of £336 million the previous year.
But, with redundancy costs included, Royal Mail still remained in the red with underlying operating losses of £8 million, it said.
IDS said the underlying improvement at Royal Mail came “despite an increasingly competitive and challenging trading environment”.
The wider group, which also owns the GLS parcel business, reported underlying earnings of £278 million, against losses of £28 million in the previous year.
Pre-tax profits stood at £429 million, up from £114 million in the 53 weeks to March 2024.
Parcel volumes at Royal Mail post boxes also rose 6 per cent over the year, although the ongoing decline in mail saw addressed letters drop 4 per cent.
The figures come after a milestone year for the group, which saw Royal Mail taken into foreign ownership for the first time in its more than 500-year history.
Mr Seidenberg said: “It has been a year of change for IDS.”
He added: “Royal Mail returned to profit for the first time in three years, marking an important milestone in the company’s turnaround.
“With IDS’s acquisition by EP Group complete, and universal service reform decided, now is the time for us to drive the business forward and capitalise on our momentum.”
It added it would continue to invest heavily in postal lockers following the EP Group takeover, with Royal Mail having boosted its out of home locations by almost 70 per cent to about 24,000 by the end of August and launched its own branded lockers.
GLS continued to expand its network to more than 110,000 out-of-home access points and more than doubled the size of the GLS locker network to more than 20,000 by the end of August, the company said.
“Under the ownership of EP Group, we will continue to invest in the rapid expansion of our out-of-home network across both businesses to meet the changing needs of our customers around the globe,” Mr Seidenberg said.
IDS formally left the London Stock Exchange on June 2 after being taken over by EP Group following clearance by the Government at the end of 2024 and approval by shareholders in April.
Royal Mail’s new owner also issued a £1 so-called golden share to the UK Government, as agreed under the deal.
Mr Kretinsky, appointed as the new chairman of Royal Mail, has pledged to stick to the Universal Service Obligation after the takeover.
