Online shopping boom boosts Royal Mail

The group reported a £20m operating loss in the 26 weeks to September 27, down from earnings of £61m a year ago, after its core Royal Mail postal arm plunged to a £176m operating loss.

However, it said full year revenues are now expected to be between £380m to £580m higher year-on-year, which could see the division deliver a “better than break-even” result.

The firm cheered the boost from rocketing online shopping and delivery demand, with parcels revenue dwarfing turnover from letters for the first time.

Parcels revenues now represent 60 per cent of group-wide sales, compared with 47 per cent a year earlier.

Keith Williams, interim executive chairman at Royal Mail, said: “Whilst the Covid-19 pandemic continues to present challenges for both Royal Mail in the UK and (international parcels business) GLS, the first-half performance has been above our initial expectations in many areas.”

The first half results show the costs faced during the coronavirus crisis, with the group forking out £155m in its first half for social distancing measures and to cover a rise in absence rates.

The ongoing decline in letters also continued to weigh on the group, with mailings down 33 per cent, while parcel mailingsrose 31 per cent.