StockMarketWire.com - Royal Mail has announced a management restructure that will impact around 2,000 roles as it said it was taking action on costs to address the 'immediate impact' of COVID-19, as it reported lower revenue for the first two months of 2020-21.

The company announced a three-step plan which is expected to result in a £130m saving in people costs next year and flat non-people costs, along with a reduction of around £300m in capex across the group over the next two years.

Royal Mail said that the largest reductions will be in senior executive roles and non-operational functions.

In its annual results for the full year ended 29 March 2020, Royal Mail provided a trading update for the first two months of 2020-21 and reported revenue was down £29m year-on-year, as addressed letter revenue fell 23% and volumes were down 33%.

Operating profit fell £108m year on year in current trading, while total costs rose £80m driven by costs related to social distancing measures, high levels of absence and protective equipment.

Royal Mail set out two scenarios for how the business could perform in 2020-21 and said that assuming a UK GDP decline of 10% and COVID-19 restrictions continuing to ease post June, revenue would be £200m to £250m lower year-on-year, with £140m of additional costs related to COVID-19.

Should UK GDP decline 15% Royal Mail revenue will be £500m to £600m lower year-on-year, with £155m of additional COVID-19 related costs.

In its full-year results to the end of March, Royal Mail saw group revenue increase by £259m, or £396m after adjusting for the 53rd week in 2018-19, and reported adjusted operating profit of £325m, down 13.6%.

The company also announced it had scrapped its dividend for 2019-20 and 2020-21 but said that the board’s ambition was to recommence dividend payments in 2021-22.

Interim executive chair Keith Williams 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.'



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