UK’s Royal Mail to cut 2,000 management jobs

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The UK’s Royal Mail Group today announced its full year financial results for 2019-20 and, despite an increase in adjusted revenue of £396m (US$491m), its operating profit dropped by £124m (US$153m).

This was due to a reduction in revenue for its Royal Mail business unit (UKPIL), which in the first two months of the 2020-21 year was down by £29m (US$35.7m) year-on-year. As a result, the company is due to cut around 2,000 management jobs from a workforce of 9,700. It said the largest reductions will be in senior executive roles and non-operational functions.

In a statement, Keith Williams, interim executive chair, Royal Mail Group, said, “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.”

To address the organizations underperformance, Williams said, “We are implementing a three-step plan. Firstly, we’re taking immediate action on costs, which will result in a £130m (US$161m) saving in people costs next year and flat non-people costs, along with a reduction of around £300m (US$372m) in capex across the group over the next two years, to address the immediate impact of Covid-19.

“Regrettably, we are also proposing a management restructure impacting around 2,000 roles. We are committed to conducting the upcoming consultation process carefully and sensitively. We will work closely with our managers and their representatives during this difficult period, including supporting them as they transition into the next stage in their careers.

“Secondly, we’re accelerating the pace of operational change in the UK to address long-standing challenges and be sustainable for the long term. Thirdly, we’re working with all stakeholders to underpin the USO to ensure it reflects user needs and is modern, contemporary and sustainable. We want to ensure Royal Mail remains a key part of the UK economy, a good employer, and the nation’s delivery partner of choice.

Despite the reductions in Royal Mail’s profitability, its subsidiary, General Logistics Systems, which handles the bulk of parcel operations, experienced growth. “At GLS, we are capitalising on growth opportunities in parcels, protecting margin in the short term with opportunities for margin expansion in the future. At the same time, we are seeking to improve performance in key markets. We will focus investment on growing markets, and improve cashflow,” Williams said.

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