London Daily

Focus on the big picture.
Thursday, Dec 25, 2025

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
UK Mortgage Rates Edge Lower as Bank of England Base Rate Cut Filters Through Lending Market
U.S. Supermarket Gives Customers Free Groceries for Christmas After Computer Glitch
Air India ‘Finds’ a Plane That Vanished 13 Years Ago
Caviar and Foie Gras? China Is Becoming a Luxury Food Powerhouse
Hong Kong Climbs to Second Globally in 2025 Tourism Rankings Behind Bangkok
From Sunniest Year on Record to Terror Plots and Sports Triumphs: The UK’s Defining Stories of 2025
Greta Thunberg Released on Bail After Arrest at London Pro-Palestinian Demonstration
Banksy Unveils New Winter Mural in London Amid Festive Season Excitement
UK Households Face Rising Financial Strain as Tax Increases Bite and Growth Loses Momentum
UK Government Approves Universal Studios Theme Park in Bedford Poised to Rival Disneyland Paris
UK Gambling Shares Slide as Traders Respond to Steep Tax Rises and Sector Uncertainty
Starmer and Trump Coordinate on Ukraine Peace Efforts in Latest Diplomatic Call
The Pilot Barricaded Himself in the Cockpit and Refused to Take Off: "We Are Not Leaving Until I Receive My Salary"
UK Fashion Label LK Bennett Pursues Accelerated Sale Amid Financial Struggles
U.S. Government Warns UK Over Free Speech in Pro-Life Campaigner Prosecution
Newly Released Files Shed Light on Jeffrey Epstein’s Extensive Links to the United Kingdom
Prince William and Prince George Volunteer Together at UK Homelessness Charity
UK Police Arrest Protesters Chanting ‘Globalise the Intifada’ as Authorities Recalibrate Free Speech Enforcement
Scambodia: The World Owes Thailand’s Military a Profound Debt of Gratitude
Women in Partial Nudity — and Bill Clinton in a Dress and Heels: The Images Revealed in the “Epstein Files”
US Envoy Witkoff to Convene Security Advisers from Ukraine, UK, France and Germany in Miami as Peace Efforts Intensify
UK Retailers Report Sharp Pre-Christmas Sales Decline and Weak Outlook, CBI Survey Shows
UK Government Rejects Use of Frozen Russian Assets to Fund Aid for Ukraine
UK Financial Conduct Authority Opens Formal Investigation into WH Smith After Accounting Errors
UK Issues Final Ultimatum to Roman Abramovich Over £2.5bn Chelsea Sale Funds for Ukraine
Rare Pink Fog Sweeps Across Parts of the UK as Met Office Warns of Poor Visibility
UK Police Pledge ‘More Assertive’ Enforcement to Tackle Antisemitism at Protests
UK Police Warn They Will Arrest Protesters Chanting ‘Globalise the Intifada’
Trump Files $10 Billion Defamation Lawsuit Against BBC as Broadcaster Pledges Legal Defence
UK Says U.S. Tech Deal Talks Still Active Despite Washington’s Suspension of Prosperity Pact
UK Mortgage Rules to Give Greater Flexibility to Borrowers With Irregular Incomes
UK Treasury Moves to Position Britain as Leading Global Hub for Crypto Firms
U.S. Freezes £31 Billion Tech Prosperity Deal With Britain Amid Trade Dispute
Prince Harry and Meghan’s Potential UK Return Gains New Momentum Amid Security Review and Royal Dialogue
Zelensky Opens High-Stakes Peace Talks in Berlin with Trump Envoy and European Leaders
Historical Reflections on Press Freedom Emerge Amid Debate Over Trump’s Media Policies
UK Boosts Protection for Jewish Communities After Sydney Hanukkah Attack
UK Government Declines to Comment After ICC Prosecutor Alleges Britain Threatened to Defund Court Over Israel Arrest Warrant
Apple Shutters All Retail Stores in the United Kingdom Under New National COVID-19 Lockdown
US–UK Technology Partnership Strains as Key Trade Disagreements Emerge
UK Police Confirm No Further Action Over Allegation That Andrew Asked Bodyguard to Investigate Virginia Giuffre
Giuffre Family Expresses Deep Disappointment as UK Police Decline New Inquiry Into Andrew Mountbatten-Windsor Claims
Transatlantic Trade Ambitions Hit a Snag as UK–US Deal Faces Emerging Challenges
Ex-ICC Prosecutor Alleges UK Threatened to Withdraw Funding Over Netanyahu Arrest Warrant Bid
UK Disciplinary Tribunal Clears Carter-Ruck Lawyer of Misconduct in OneCoin Case
‘Pink Ladies’ Emerge as Prominent Face of UK Anti-Immigration Protests
Nigel Farage Says Reform UK Has Become Britain’s Largest Party as Labour Membership Falls Sharply
Google DeepMind and UK Government Launch First Automated AI Lab to Accelerate Scientific Discovery
UK Economy Falters Ahead of Budget as Growth Contracts and Confidence Wanes
Australia Approves Increased Foreign Stake in Strategic Defence Shipbuilder
×