Royal Mail have said they may need to up prices and slash costs in a bid to tackle soaring inflation pressures.
The group said it was facing “significant headwinds” from higher wage demands as well as surging energy and fuel costs as they also said they would have to go further with cost savings, increasing its target to more than £350 million from around £290 million previously.
They insisted it was not planning further job losses to meet the new target having already announced back in January around 700 management jobs would go as part of already announced cost-cutting aims.
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It said it was also keeping its prices under constant review in order to combat rising inflation which comes after it recently hiked the cost of posting letters by an average of around seven per cent and parcel prices by an average of around four per cent on top of a fuel surcharge.
The news comes as the group reported an eight per cent rise in underlying operating profits to £758 million for the year to the end of March whilst on a reported basis, pre-tax profits fell 8.8% to £662 million.
Royal Mail said it hoped to meet earnings expectations for its UK business over the year ahead, if it can agree a pay deal with its union that is “broadly” in line with its current offer.
Simon Thompson, chief executive of Royal Mail told the PA news agency that the group remains in “intense discussions” with the Communication Workers Union (CWU) as they look to agree on pay.
He added: “As we emerge from the pandemic, the need to accelerate the transformation of our business, particularly in delivery, has become more urgent.
“Our future is as a parcels business, so we need to adapt old ways of working designed for letters and do it much more quickly to a world increasingly dominated by parcels.
“The last two years has shown us all how quickly customer needs can change. Our focus now is to work at pace with our people and our trade unions to reinvent this British icon for the next generations, so that we can give our customers what they want, grow our business sustainably and deliver long-term job security for our great team.
“We have no time to waste.”
