London Daily

Focus on the big picture.
Tuesday, Jun 23, 2026

Royal Mail rewards investors with £400m payday after COVID boost to parcels

Royal Mail rewards investors with £400m payday after COVID boost to parcels

The company tells investors its decision to focus on a parcel-led future is paying off as shareholders, including staff, are set for a windfall on top of an interim dividend.

Royal Mail is to hand shareholders a £400m reward after its parcels business benefited from a surge of online orders during the coronavirus crisis.

The company announced a share buyback of £200m and £200m special dividend while revealing a leap in half-year group profits on the back of a 7% rise in revenue to just above £6bn.

Pre-tax earnings for the six months to 26 September came in at £315m compared to £17m in the same period last year.


Its bottom line was also boosted by actions on costs, with £56m saved from a restructure of management alone as it continues to battle legacy systems and focus on greater use of technology.

Royal Mail, which has focused its growth on parcels amid a trend of declining letter volumes, said UK parcel volumes were up 33% on pre-pandemic levels.

Internationally, volumes took a 37% hit partly due to restricted air freight capacity - a result of the global supply woes that are hitting businesses more widely - but higher margins offset the decline, the company said.

Letters were 11% up in the period but remain down by almost a fifth on pre-COVID crisis levels.

Royal Mail also revealed that it now expected to be debt-free over the next two years.

It said that the £400m reward scheme followed a review of its retained cash balance and it believed it could fund its growth plans through existing revenue flows.

Royal Mail staff who still have stock after they were handed shares as part of the company's 2013 privatisation, will be among those to benefit.

The payments are on top of an interim dividend of 6.7 pence per share to be paid on 12 January.

Shares rose by nearly 10%.

Simon Thompson is a former Ocado executive who also ran the NHS Test and Trace app.


Chief executive Simon Thompson told investors: "Reinvention of Royal Mail is inflight; we are making pleasing progress with our change agenda.

"We're seeing the benefits of our programmes to reduce costs, and are developing our plans to address inflationary pressures which will impact next year and beyond."

He added: "The pandemic has resulted in a structural shift and accelerated the trends we have been seeing.

"Domestic parcel volumes, excluding international, are up around a third since the pandemic, whilst addressed letter volumes, excluding elections, are down around a fifth.

"This reaffirms that our strategy to rebalance our offering more towards parcels is the right one, and demonstrates the need to start defining what a sustainable Universal Service is for the future.

"I want to thank our teams for what we have delivered so far: it is an impressive start but there is still much more to do together."

Nicholas Hyett, equity analyst at Hargreaves Lansdown, said of the figures: "The pace of Royal Mail's turnaround has hugely impressed, leaving the group in very real danger of becoming an attractive business.

"It would be easy to put the current windfall down simply to the effect of the pandemic on parcel demand. And that has played a part. But ramping up facilities to cope with the extra demand is no small achievement, and a quick glance under the hood shows a business which is in far better shape than before the pandemic.

"Overall the group is driving higher volumes with lower costs - doing wonders for margins."

Newsletter

Related Articles

0:00
0:00
Close
Taxpayer Support Grows for Higher Digital Levies on Multinational Tech Companies
Bank of England Signals Caution Over Inflation Despite Easing Energy Prices
Lloyds Banking Group Expands Artificial Intelligence Hiring Amid Sector-Wide Automation Shift
Film Producer Corporate Collapse Leaves Creditors Facing Unrecoverable Losses
UK Ten-Year Brexit Anniversary Highlights Ongoing Political and Economic Uncertainty
Nottingham Maternity Scandal Inquiry Reveals Systemic Failings in NHS Care
Met Office Heatwave Prompts Public Health Warnings Across United Kingdom
Concerns Rise Over Fiscal Stability as Political Uncertainty Weighs on UK Borrowing Costs
UK Taxpayers Back Higher Digital Taxes on Global Technology Firms, Survey Shows
Bank of England Holds Interest Rates Steady Amid Persistent Services Inflation
Reform UK and Opposition Leaders Call for General Election Following Starmer’s Departure
Ten Years After Brexit Referendum, UK Faces Ongoing Political Fragmentation and Economic Debate
Nottingham University Hospitals Maternity Inquiry Exposes Severe NHS Failures
Met Office Issues Heat Health Alerts as United Kingdom Faces Record-Breaking Temperatures
Andy Burnham Emerges as Front-Runner for Labour Leadership After Starmer’s Resignation
Keir Starmer Resigns as UK Enters New Phase of Political Leadership Transition
UK Expands Alcohol Ban Enforcement Using Tagging Technology Ahead of World Cup
UK Invests £50 Million in Critical Minerals Supply Chain Security
UK Appoints Special Envoy on Preventing Sexual Violence in Conflict
UK Introduces Fines for Landlords of Unsafe Rental Properties
Reform UK Leads Opinion Polls as Immigration Debate Reshapes UK Politics
Police Investigate Edinburgh Attacks as Potential Hate Crimes
King Charles to Publish Personal Tax and Royal Household Financial Records
Nottingham University Hospitals Maternity Inquiry Report Set for Publication
Heat-Health Alerts Issued Across London and Southern England Amid Rising Temperatures
UK Economy Shows Pressure From Middle East Conflict Despite Modest Growth
Brexit Anniversary Reignites Debate Over UK Economic and Political Direction
UK Parliament Continues Legislative Work Amid Leadership Transition
Financial Markets Hold Steady After UK Leadership Shake-Up
Andy Burnham Enters Labour Leadership Race With Strong Parliamentary Backing
Keir Starmer Resigns as UK Prime Minister After Two Years in Office
Reform UK MP Lee Anderson to Raise Pension Concerns Over British Coal Staff Superannuation Scheme
UK Parliament to Debate Newborn Screening for Spinal Muscular Atrophy Following Public Petition
Met Office Warns of Water Safety Risks During Heatwave as Temperatures Peak in England
Treasury Increases Mileage Allowance Payments for 2026–27 Tax Year to 55 Pence Per Mile
UK Government Raises Electricity Generator Levy to 55 Percent in New Revenue Measure
House of Lords Moves Financial Services and Markets Bill to Committee Stage Amid Regulatory Scrutiny
Westminster Hall to Debate Petition on Pro-Israel Influence in UK Politics
UK Parliament Prepares for Estimates Days Debates as Backbench Business Schedule Approved
Armed Forces Bill Nears Final Stages in UK House of Commons With Military Justice Reforms
Donald Trump Comments on UK Political Situation, Citing Immigration and Energy Policy Concerns
Andy Burnham By-Election Victory Fuels Speculation Over Potential Labour Leadership Contest
UK Economy Shows Resilience but Faces Headwinds from Middle East Tensions, UK Finance Says
UK Parliament Opens Week of Debates on Net Zero, Security and Armed Forces Reform
Met Office Issues Amber Extreme Heat Warning as Temperatures Expected to Reach 35C Across England and Wales
Prime Minister Keir Starmer Faces Mounting Leadership Pressure After Makerfield By-Election Defeat
London Hotel Wins World’s Best Afternoon Tea Award at International Hospitality Guide La Liste
Court of Appeal Rules in Favour of Competition and Markets Authority in Phenytoin Drug Case
Chichester Waste Site Suspended After Environment Agency Finds Serious Fire and Pollution Risks
UK Appoints Chris Elmore as Special Envoy on Preventing Sexual Violence in Conflict
×