Royal Mail boss: We can take on Amazon despite profit fall

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Royal Mail’s chief executive has Amazon’s customers in her sights as she insisted that she was determined to revive the business as profits tumbled.

Moya Greene said that the online retailer, her biggest customer and competitor, was a very innovative company but that it doesn’t “have the same drive to make money as Royal Mail”.

Royal Mail said that new contract wins from retail customers including Marks & Spencer, John Lewis and Waterstones had more than made up for the loss of volumes from Amazon, which has launched its own logistics arm and is now delivering most of its 300 million parcels itself.

The company said almost half its account customers were now using tracked mail, which was launched last year and earns more.

“This was the year that we were able to deliver more change than ever before. We are determined to increase the pace of change, make the company easier to do business with and maintain our number one spot in this very competitive market,” said Greene, who has been leading the group for six years.

Royal Mail’s pre-tax profits fell by a third last year, as the postal group continues to spend hundreds of millions of pounds on modernising the business.

Pre-tax profits fell from £400 million to £267 million last year as a rise in parcel traffic failed to compensate for falling revenues, which were down 1% overall.

Adjusted operating profit, after investment ploughed into its turnaround, fell by 2% to £551 million. Investors were unimpressed, sending the shares down by 5%.

Royal Mail — which still has a large retail shareholder base after its discounted flotation in 2014 — said it would raise its full-year dividend by 5% to 22.1p

Royal Mail took £180 million of cost out of its business and said that it was on track to reduce annual charges by £500 million for the 2016-17 financial year. Some 3500 people have left the business in the past 12 months.