Royal Mail PLC said Tuesday that revenue from its U.K. operations was ahead of its expectations in the first five months of fiscal 2021, but that costs were also higher than anticipated due to a shift to parcels from letters.
The U.K. postal company said total revenue from its U.K. operations was up by 139 million pounds ($183 million) for the five months to Aug. 30. Parcel revenue was up 33% on year, while letter revenue was down 22%, the company said.
However, the shift to parcels from letters increased costs in the U.K. by GBP85 million, which came on top of coronavirus-related costs of GBP75 million, Royal Mail said.
Five-month revenue at the group's European unit GLS was up 19% on year, Royal Mail said.
The company said parcel revenue in both its Royal Mail U.K. operations and in GLS were significantly ahead of its pre-pandemic expectations. While this has increased profit at GLS, it hasn't halted the long-term decline in Royal Mail profitability, it said. As a result, the group continues to expect its Royal Mail unit to report a material loss for fiscal 2021, and warned that it won't become profitable without substantial business change.