Royal Mail Group is the UK's principal postal services company, and was also until comparatively recently the country's biggest retailer as a result of its national chain of post offices. That business was split off as a separate state-owned entity, Post Office Ltd, in 2012 in the run up to Royal Mail's IPO the following year. It remains Royal Mail's main retail partner. With roots dating back to 1635, the Royal Mail has a statutory obligation to provide postal delivery services six days a week to every address in the UK at a uniform price, irrespective of the distance travelled. In return it has exclusive access to the country's network of post boxes, and also produces what is in effect its own currency, postage stamps. For years, it endured a stormy relationship with successive British governments, its long-time effective owner, as it struggled with the declines in letter delivery and increased demands for parcel services. Freedom from state control after 2000 came at a high price, with the loss of government contracts, as well as the monopoly on low-price mail delivery. However performance has improved steadily since the IPO as a result of steady improvements in UK parcel delivery service Parcelforce and its European network GLS which covers over 40 countries in Europe, as well as the Western United States and parts of Canada. The explosive growth of ecommerce has significantly boosted parcel volumes, which are growing at around 5% a year. However the bread and butter of the business is still letters, even though volumes declined by 5% in ye March 2018 to 14.4bn items. Revenues were £10.2bn, but costs are also rising steeply. Pretax profits fell to £212m for the year. Rico Back succeeded Moya Greene as CEO in 2018, having previously led GLS since 2000.
Capsule checked 27th March 2019
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Adbrands Weekly Update 29th Sep 2016: Deutsche Post, which also owns the international courier service DHL, strengthened its commitment to the UK delivery services market with the acquisition of struggling local company UK Mail for £243m. The UK is Europe's biggest e-commerce market, and the deal will also put Deutsche Post into direct competition with Royal Mail as one of only two companies with a national franchise to manage bulk delivery of letters, such as bank statements and utility bills.
Adbrands Weekly Update 10th Oct 2013: This week witnesses the biggest sell-off of a UK state utility since the 1990s, with the long-awaited IPO of the Royal Mail. The government is selling between 40% and 60% of the country's 500-year-old delivery service, marking the end of a long and difficult journey first proposed by Margaret Thatcher's government in the 1990s. Virtually every subsequent trade & industry secretary has revived the idea, but each time plans have been scrapped for fear of clashes with Parliamentary backbenchers and unions. The union representing postal workers has threatened industrial action again this week to protest against the float, but that warning was somewhat undermined by the revelation that virtually all of Royal Mail's 150,000 workers have accepted the free share handout for employees. Investor demand for the £3.3bn offer has also been heavily over-subscribed, prompting memories of the hugely popular BT and British Gas floats of the 1980s. Almost all observers predict a big jump from the 330p offer price when shares start limited trading on Friday morning. Retail investors are barred from selling until Tuesday next week.
Adbrands Weekly Update 11th Jul 2013: The British Government is press ahead with a full IPO of postal services group Royal Mail, despite strong opposition from the Communication Workers Union. The CWU claims that privatisation will lead to significant reductions in jobs, services and efficiency, and has vowed to block the sell-off with industrial action. The government hopes to win over workers with a mammoth employee share scheme, in which 10% of shares, with a combined value of around £250m, have been earmarked for the Royal Mail's 150,000 employees. The offering is now pencilled for April 2014.
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