(Adds CEO comments, details, background)
May 18 Royal Mail reported a fall in
annual profit on Thursday and warned the drop in letter volumes
this year would be at the high end of a previous estimate if
business uncertainty persists.
The former monopoly said adjusted operating profit before
transformation costs fell 6 percent to 712 million pounds ($922
million) in the year to March 26, toward the top end of a
company-compiled consensus of 681 million to 719 million pounds.
Royal Mail has seen a worsening of conditions in letters
delivery, where uncertainty in the lead-up to and following the
Brexit vote has dragged on marketing and business mail, and
continues to face competition in its parcels business with
Amazon using its own delivery network.
The company is also embroiled in talks with unions over
plans to close its defined benefit pension scheme at the end of
March 2018 after finding that it would have to double annual
contributions to more than 1 billion pounds to keep it running.
The company, which was floated in 2013, on Thursday
reiterated its forecast that addressed letter volume would
decline by 4 to 6 percent per year, excluding the impact of
political parties' election mailings.
The decline would be at the higher of the end in the current
financial year if business uncertainty persisted, it said.
Over the year ended March, comparable letters volumes were
down 6 percent, in line with the decline seen for the first nine
The company said it remained on track avoid 600 million
pounds in annualised costs over three years to March 2018 and it
would generate net cash investment of around 450 million pounds
this year as it surpasses its "peak" investment period.
"This has been a more challenging period for UK businesses
and we have come through it well... Through a combination of our
strategic approach to costs and more efficient investment spend,
we will support our progressive dividend policy," CEO Moya
($1 = 0.7720 pounds)
(Reporting by Esha Vaish in Bengaluru; editing by Jason Neely)