Royal Mail posts first profit in three years after Kretinsky takeover

Royal Mail returned to profit for the first time in three years, reporting an annual profit of £12 million excluding redundancy costs for the year to March 31, compared with a £336 million loss the previous year. The results are the first since Czech billionaire Daniel Kretinsky's EP Group completed its takeover of the 500-year-old business in April.

Management said the profit marks an early sign of progress as the company seeks to stabilise after a period of losses, service disruption and steep regulatory penalties for missed delivery targets. Martin Seidenberg, chief executive of International Distribution Services (IDS), which owns Royal Mail, called the return to profit an "important milestone in the company's turnaround."

Royal Mail said parcel volumes increased 6% over the year while letters declined 4%, reflecting a strategic shift to more profitable parcel deliveries as traditional letter traffic falls. The group has moved to reshape operations, including changes to collection and delivery patterns; last month it began stopping second-class letter deliveries on Saturdays in some areas and said full implementation of the changes could take up to a year and a half.

The business has faced a difficult few years, losing money and market share amid long-term declines in letters sent. Industrial action and a heavy fine for missing delivery targets added to recent headwinds, prompting management and its new owner to pursue cost reductions and operational changes aimed at improving efficiency and service performance.

IDS reported the figures excluding redundancy costs, which the company said would affect net results in the short term. Management presented the outcome as an early validation of the turnaround plan, while warning that further work remained to secure sustained improvement and restore customer confidence.

Analysts and investors will focus on execution of the operational changes, cost-control measures and whether the uplift in parcel volumes can offset continuing declines in letters. Royal Mail and its new ownership said they will continue to modernise the network and prioritise services that generate higher margins as they implement the changes announced since the takeover.