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Royal Mail results will show if Covid pandemic boom is here to stay

Royal Mail faces major test when it reveals if boom in business that came with Covid pandemic is here to stay

Royal Mail faces a major test when it reveals if the boom in business that came with the pandemic is here to stay. 

The 506-year-old firm benefited as shops shut in lockdown and people travelled less. That triggered a huge rise in parcel deliveries – but there are fears it could now be flagging after Covid restrictions ended. 

In January, Royal Mail said it expected profits at its UK arm of £430m for the 12 months to March 31, down from a previous target of £500m. 

So all eyes are on its full-year results on Thursday. Total profits – including at its international business – are expected to rise from £664m to £722m, according to Refinitiv data. 

The share price has tumbled by a third this year, indicating that there is some scepticism about its prospects. 

Covid-related staff absences will have pushed up its costs. But analysts are likely to look past one-offs. 

Royal Mail grabbed headlines this week when it said it was planning 50 new routes for delivery drones after a series of trials, though this raises questions about how much it is spending on new technologies. A huge investment ‘well over £400m’ has raised eyebrows. 

Analysts will also be keen for an update on the aim to slash 700 managers’ jobs to save £40m a year. 

Laura Hoy, equity analyst at Hargreaves Lansdown, said it was in a ‘tricky position’. She said: ‘Now that tailwinds have dissipated, much of the transition involves cutting cost, and its biggest cost is its massive network of employees.’