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Pandemic hits letters and high street revival, Royal Mail warns

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Royal Mail
Royal Mail

The pandemic has sparked a plunge in letter writing and left consumers with little reason to shop on the high street, Royal Mail has warned.

Letter volumes remain almost a fifth lower than pre-pandemic levels as Britain emerges from the Covid crisis, the company said.

Keith Williams, chairman of Royal Mail, added that demand for parcels is stabilising at much higher levels than before the disease struck as shoppers shun the high street and order goods online instead.

Royal Mail was in the grip of a bitter industrial dispute at the start of 2020, and faced an existential crisis over its strategy, but has emerged as a big winner from the pandemic.

Its shares had fallen to almost 120p 18 months ago but are now trading at 482p.

The company has proved a shrewd investment for inscruitable billionaire Daniel Kretinsky, known as the “Czech sphinx”, who has made hundreds of millions of pounds by buying Royal Mail shares and is now its biggest investor.

Mr Williams, a veteran executive who made peace with warring unions while running British Airways, has struck a deal with the powerful Communication Workers Union to trial seven-day-a-week parcel deliveries and is mulling an end to Saturday letter drops.

The sharp fall in addressed letter volumes puts further pressure on the Government to consider a change of the law to allow Royal Mail to focus on a five-day-a-week service.

This change would let the company save hundreds of millions of pounds that could be invested in expanding its parcel deliveries.

Revenues in the five months to August rose 8.2pc and were up 17.7pc high than during the same period of 2019.

Operating profits in the half-year to September will be about £400m, with a better bottom line expected over Christmas in the second half of Royal Mail’s financial year.

Mr Williams did, however, warn that the company's costs are likely to rise as inflation bites.

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