Britain’s Royal Mail (RMG.L) laid out restructuring plans on Thursday that will affect around 2,000 management roles and see it save 130 million pounds in staffing costs next year as it reported a 31% fall in annual profits.
The company, whose Chief Executive Officer Rico Back stepped down last month after a year of battles with unions over a 1.8 billion pound restructuring plan, said it was also cutting 300 million pounds in capital spending across the group over the next two years.
It said it plans to carry out a three-step plan that will also include operational changes in the UK to address “long-standing challenges” after Back’s plans to transform Royal Mail into a sustainable, profitable operation by 2024 was delayed by labour unrest and the coronavirus crisis.
“In recent years, our UK business has not adapted quickly enough to the changes in our marketplace of more parcels and fewer letters. COVID-19 has accelerated those trends, presenting additional challenges,” Executive Chairman Keith Williams said.
Royal Mail, one of the world’s oldest postal companies, said it does not intend to pay dividends in 2021 but hopes to restart payments in 2022.
Annual adjusted pretax profit came in at 275 million pounds, compared with 398 million pounds reported a year earlier, it said. Parcel volumes grew less than expected, by 2%, it added.
Traders said they expected the company’s shares to fall by 3-5% at opening given the continued weakness in its UK letters business.
The company also said James Rietkerk, the chief of its international ground-based parcel operation, GLS, has stepped down.