Royal Mail has cautioned over possible further price hikes and revealed plans to ramp up cost cutting as it looks to tackle soaring inflation pressures.
The group said it was facing “significant headwinds” from higher wage demands, surging energy and fuel costs.
It said it will need to go further with cost savings, increasing its target to more than £350 million from around £290 million previously.
Job cuts
Royal Mail insisted it was not planning further job losses to meet the new target, having in January already announced about 700 management jobs would go as part of already announced cost-cutting aims.
It said it was also keeping its prices under constant review to combat rising inflation, which comes after it recently hiked the cost of posting letters by an average of around 7%, and parcel prices by an average of about 4%, on top of a fuel surcharge.
The firm reported an 8% rise in underlying operating profits to £758 million for the year to the end of March.
On a reported basis, pre-tax profits fell 8.8% to £662 million.
Laura Hoy, an analyst at Hargreaves Lansdown, said: “Royal Mail’s in a tricky position heading into its results.
“The group’s been delivering on an impressive turnaround that’s seen a shift toward automation and efficiency, which was only helped along by the pandemic.
“Now that those tailwinds have dissipated, much of the transition involves cutting costs, and Royal Mail’s biggest cost is its massive network of employees.”