RM losses increased by £100m

Royal Mail boss: top priority is improving quality

Seidenberg: Royal Mail has "unrivalled scale"
Seidenberg also said the need to reform the USO was urgent

Royal Mail is “transforming into a parcels business, whilst also delivering letters” according to the parent group’s new boss, who has also pledged to deliver a successful Christmas for customers.

Martin Seidenberg, appointed CEO of Royal Mail parent International Distributions Services in July, made the comments alongside the group’s half-year results.

Seidenberg said that in his first three months in the job he had taken rapid action to stabilise Royal Mail after last year’s industrial action and the loss of business due to poor performance.

"My top priority now is improving quality. From experience, I know that quality is key for customer satisfaction and sustainable growth, so we are pulling out all the stops to deliver Christmas for our customers,” he said.

Actions being taken include recruiting 16,000 seasonal workers, opening five temporary sorting centres and a new incentive scheme for operational employees worth up to £500 each for hitting local and national quality targets.

"We're modernising the network, with two new automated hubs, and becoming more agile in our operations, more efficient, and more sustainable. I'm pleased to say customers are coming back to Royal Mail, and we're on track with our win back programme.”

He also called out the government and Ofcom for the lack of reform of the Universal Service Obligation, and said the UK was being “left behind” compared with other countries.

"Looking ahead, we are transforming our business every day, but we can't do it all on our own. We also need the regulator and the Government to do their bit.

“It's simply not sustainable to maintain a network built for 20 billion letters when we're now only delivering seven billion. The UK is not immune to the trends that we see across the world.

“Many other comparable countries have already reformed their Universal Service, and the UK is getting left behind. We welcome the fact that Ofcom will be reviewing options for the Universal Service, but the need for reform is urgent,” he stated.

Seidenberg also said he was “ruthlessly prioritising high-return projects” at Royal Mail.

Seidenberg’s ‘to do’ list also includes appointing a new CEO for Royal Mail. A spokesperson told Printweek that the search was still underway, and there was no further update at present on a likely timeframe for the appointment.

Group revenue at IDS was essentially flat in the 26 weeks to 24 September, up 0.4% at £5.86bn.

At Royal Mail, parcel volumes were down 6%, and sales fell by 6.2% to £1.85bn, amid a weaker macroeconomic environment and “drag from customer losses experienced during industrial action”.

Royal Mail’s addressed letter volumes, excluding elections, fell by 9% to 3.26bn items. Price hikes resulted in letter revenues increasing by 1% to nearly £1.69bn.

Total sales at Royal Mail were £3.54bn, down 2.9%.

Continental parcel wing GLS increased volumes by 6%, and sales by 5.9% to £2.3bn.

The overall IDS operating loss was £243m, with the losses at Royal Mail – which posted an adjusted operating loss up £100m at £319m – more than offsetting the profits made at GLS.

The results also include a £5.6m charge to cover the Ofcom fine levied earlier this week

Shares in IDS rose in early trading, but had slipped by 1.8% to 240.30p at the time of writing (52-week high: 277.50p, low: 191.20p).