Company profits - Covid vs Now

[postslippete]

Since RM and the CWU have been locked in "further talks" and watching the Select Committee with Rothschild desperately trying to suggest that we aren't prioritising parcels, I think it’s worth comparing what it was like during the pandemic to what it’s like now - particularly when it comes to how much money the company could actually be making!!

During the pandemic, as an office we delivered mail every other day (although some rounds didn't get mail for days). Parcel volumes increased significantly, but if I'm quite honest, they were nothing like what we’re seeing now. It’s absolutely bonkers and it really does feel far worse than the pandemic in terms of parcel volumes.

Yet despite delivering less frequently during COVID, RM still made around £700 million profit. Yes, RM made significant money delivering COVID test kits and I’m not sure how much government support or contracts were involved there either. But since then, things changed again. After the strikes, revisions were imposed in our office as they axed dozens of duties and we had extra loops bolted on to our frames. So we’re now delivering more mail AND more parcels per postie. An extra loop on top of the original 6 or 7 loops might be hard to quantify, but multiply that nationwide and it’s not small potatoes. The last manager we had certainly got a nice 4 figure bonus out of it

At the same time, RM says mail is dwindling - but stamp prices have increased significantly, metered mail has increased, and revenue per letter has gone up. So while volumes may be down, income per item is higher.

Then you’ve also got:

New entrants on lower pay, terms and conditions (saving millions)
Reduced sick pay
Voluntary redundancies
Overtime bans / reductions
Seasonal variation of hours (longs and shorts) that were supposed to save money
Revisions increasing productivity
Fewer duties overall

All of these reduce costs.

Now I understand that costs will have gone up too - things like fuel, infrastructure, etc. etc - but a lot of the big parcel investments (hubs, lockers, automation) that the company have spent billions on have already been made. Thats why they made significant losses in those years (-£419 million 2022-23 and -£348 million 2023-24) and perhaps now we’re seeing the benefit of those investments alongside booming parcel volumes!!

So I genuinely wonder.....could RM actually be making more money now than during COVID? It might not be £700 million profit again, but I honestly wouldn’t be surprised if it’s somewhere near that mark (even if RM are most reluctant to show that much profit). They might say that parcel margins are tighter now because RM are competing with gig economy couriers, but wasn't this the case during the pandemic?? Our market share on parcels might have declined since 2020 (35- 40% of the UK parcel market to around 25% market share today) BUT parcel volumes overall have increased significantly so that part doesn't fully check out especially if the infrastructure now exists as well.

When I looked at the finances and the growth of all the other UK couriers it shows that the parcel market is profitable overall. DPD reported pre-tax profits of £200 million, Evri had a record EBITDA of £341 million as volumes were up 25% in 2 years and whilst Amazon doesn't like to break things down to show how much profit they are making, they have seen rapid growth since 2020 and I wouldn't be surprised if it is growing the fastest. Thats why they are regularly dumping the sh*t on us. It's our one huge advantage over other couriers - we have network leverage. And the cost of delivering one extra parcel is relatively small once you're already delivering mail.

And when you then factor in that a billionaire who started as a minority shareholder now wants to own the whole company, it does make you wonder whether the business is being portrayed as struggling. If others are making plenty of dough from parcels and we are now delivering huge volumes, why aren't we as profitable?? They can't use delivering letters as an excuse. A 1st class stamp cost 76p in 2020, yet it's going up to £1.80 from the 7th April, thats a 137% increase!

Interested to hear what others are seeing in their offices - are parcel volumes now worse than the pandemic? And do you think RM’s finances are much better than they’re letting on??

[Gingerbread Fred]

Parcel volumes may be up but the cost to handle them has increased and competition means contracts are less valuable

The company is just about making a profit after losing hundreds of millions over the past couple of years

[postslippete]

Aye, but even if all of the above is true you still have....lower labour costs, bigger rounds, reduced overtime, reduced sick pay, revisions that have increased productivity and a parcel infrastructure that cost RM billions of pounds already built.

In which case it's reasonable to ask that if workload is increasing and labour costs are falling, why aren't profits improving faster?

Imho the company is not as poor as it is being portrayed. And there's a very good reason why that might suit them. They don't really want to give out meaningful pay rises or equalise the new entrants straight away as this adds to their costs. And they are clearly pushing for USO reform which is much harder to justify if they show that they are crushing it at the box office.

[Valentina@1]

They plead poverty l,but in truth they making a fortune and it’s pretty clear that something don’t add up.

[Gingerbread Fred]

Staff costs add up to over half the revenue Royal Mail bring in

Royal mail reported 24/25 taking in £8.2b of revenue (money in)

If £4b is being spend on wages a 1% pay rise equates to £40m

If the estimated 3% inflation matching pay rise comes in that will cost the business £120m

The company only made £12m profit in that year - meaning to find the payrise the company would need growth - fuels costs currently make that difficult, or cutting staff and looking for efficiency - we work harder.

Even a company as old and established as Royal Mail cannot forever be run on losses - it leads to redundancy

[TopperGas]

Re staff costs as the OP points out loads of staff are now on the lower new contracts so surely staff costs, ignoring wage inflation, are deceasing not increasing?

The company as also put up it's prices so that should, in theory, meet the inflation costs.

It does seem a mystery why we all seem to be delivering more parcels, staff numbers have reduced so some duties aren't being delivered daily, but RM are still making a loss when they made £500m during COVID.

[clashcityrocker]

It does seem a mystery why we all seem to be delivering more parcels, staff numbers have reduced so some duties aren't being delivered daily, but RM are still making a loss when they made £500m during COVID.

The Covid contract was worth £500 million wasn't it?

[CornishCracker]

Re staff costs as the OP points out loads of staff are now on the lower new contracts so surely staff costs, ignoring wage inflation, are deceasing not increasing?

The company as also put up it's prices so that should, in theory, meet the inflation costs.

It does seem a mystery why we all seem to be delivering more parcels, staff numbers have reduced so some duties aren't being delivered daily, but RM are still making a loss when they made £500m during COVID.

The NI changes brought in by Labour have increased costs by £130 million a year..

[TopperGas]

Re staff costs as the OP points out loads of staff are now on the lower new contracts so surely staff costs, ignoring wage inflation, are deceasing not increasing?

The company as also put up it's prices so that should, in theory, meet the inflation costs.

It does seem a mystery why we all seem to be delivering more parcels, staff numbers have reduced so some duties aren't being delivered daily, but RM are still making a loss when they made £500m during COVID.

The NI changes brought in by Labour have increased costs by £130 million a year..

That won't appear in the accounts until next year, it doesn't explain why RM are hardly making any profits this financial year.

[menditsa]

Done some digging on RM numbers as they seem to love them to blind people with bullshit.
Figures are from Ofcom yearly reports.

In 2015 RM figures work out at £0.35 per letter (12.3 billion letters, 4.3 billion revenue) 1st £0.63 2nd £0.54
Parcels 2 billion with revenue 8.2 billion. Employee's 145,000
£86,207 revenue generated per employee

in 2025 RM figures work out at £0.64 per letter (6.5 billion letters, 4 billion revenue) 1st £1.70 2nd £0.87
Parcels 4.2 billion with revenue 13.2 billion. Employee's 130,000
£132,308 revenue generated per employee

Now after going thro that Robin app I'd say there are 40,000 plus jobs in RM that do sod all for the business.
I'm talking office bods sat on laptops generating figures for KPI's, generating Powerpoint slides etc etc.
So if we remove these useless twats and just include the grunts (us) that do the work we have generated
£229,333 in revenue each

RM will give bullshit like we need to pay for IT staff etc etc
On that point I'd say are you paying 6 year olds to look after your IT then ? because it seems that way.
Workers have to suffer numerous problems on the PDA that are never fixed, customers constantly cant track parcels but in their wisdom they come up with a feature that you can scan your stamp barcode as a customer and send a video to your mate if they scan it with their app.

[tramssirhc]

Two facts. 1, it's a multi billion pound industry. 2, it pays some workers millions. The profit is created by us, surplus value from our labour. Only the CWU believes the industry is bankrupt. Workers know full well there's plenty of money being made from our hard work.

[Hyrrokkin]

A billionaire does not buy a business unless he sees profit in it - we are being conned.

RM love pleading poverty every chance they get.

[yellowbelly]

A billionaire does not buy a business unless he sees profit in it - we are being conned.

RM love pleading poverty every chance they get.

Didn't he say he bought it for the 'challenge' - if he wants a challenge, get on one of the rounds that hasn't been prepped for
a few days and drive a van that's done about 150k miles on it.

[abuch1980]

A billionaire does not buy a business unless he sees profit in it - we are being conned.

RM love pleading poverty every chance they get.

Didn't he say he bought it for the 'challenge' - if he wants a challenge, get on one of the rounds that hasn't been prepped for
a few days and drive a van that's done about 150k miles on it.

Nice one , made me laugh that did. I'd pay to see it happen, in a clapped out Combo that is full of cans and crisps packets and banana skins!

[postslippete]

Staff costs add up to over half the revenue Royal Mail bring in

Royal mail reported 24/25 taking in £8.2b of revenue (money in)

If £4b is being spend on wages a 1% pay rise equates to £40m

If the estimated 3% inflation matching pay rise comes in that will cost the business £120m

The company only made £12m profit in that year - meaning to find the payrise the company would need growth - fuels costs currently make that difficult, or cutting staff and looking for efficiency - we work harder.

Even a company as old and established as Royal Mail cannot forever be run on losses - it leads to redundancy

Staff costs being high is not unusual for a labour-intensive delivery business. Supermarkets and Airlines have large wage costs and don't forget that we are the one's that are out there delivering everything from bog rolls to cat food.

Also, that £12 million profit doesn't necessarily reflect the company's underlying performance as companies often include restructuring costs, impairment charges and investment write-downs which can make its profits look a lot smaller on paper. When RMG made the headlines of a "billion-pound loss" in 2022-23, the actual adjusted operating loss across the group was just £71 million, mainly because they used impairment charges that were not related to its daily operations.

IDS still generates around £12-13 billion in revenue so any small efficiency gains on a business of that size will generate significant profits. A 1% margin improvement on that alone would equate to well over £100 million. That's how they were able to afford decent pay rises in the past which cost them over £350 million.

menditsa makes a great point, especially when staff numbers have already been reduced (every office seems to be short-staffed and rely on overtime), with bigger duties, more parcels, less prep and there are now thousands of new entrants on lower pay. There is no doubt that efficiency has already increased significantly to the extent where service quality has suffered and staff burnout. From £86,000 to £132,000 revenue per employee...if each worker is generating more revenue for the business, why can't the company afford modest pay increases??

Ever since RM was privatised, shareholders have extracted well over a billion pounds from the company instead of investing that back into the company and its staff. Unfortunately for Dan, buying IDS is a bit like buying a house for the prime location in GLS but finding that it now comes with a fixer-upper attached (Royal Mail). The value is clearly there but there is a lot of work needed to unlock it. Billions have now been spent on parcel infrastructure in RM and we are now seeing a massive increase in parcel volumes so future profitability should be around the corner.

But the real sticking point for RM and one of the main reasons why they are so reluctant to equalise the new entrants, is the wider gig economy. I've already quoted how much Evri have made and I've no doubt that Amazon are absolutely crushing it. If MPs really wanted to do something positive that will improve the overall reliability if the UK delivery service then it's about time they called in the bosses of Evri and Amazon Logistics and examine whether the gig economy working conditions are fair and whether RM are being forced to compete unfairly. Evri would be much easier to investigate because of the volume of complaints that they get from consumers but for Amazon I would look at cherry picking logistics - those heavy and bulky packages that they currently like to dump on us to deliver for them. It's almost like we can't refuse any extra work whereas Amazon clearly can.