(Reuters) -Royal Mail operator International Distribution Services on Wednesday said rising costs and macroeconomic uncertainty would continue to impact margins into 2026, after reporting slower revenue growth in the first half of fiscal year 2025-2026.
For the six months ended September 28, its group revenue grew 1.6% to 6.45 billion pounds ($8.66 billion), slower than the 8.2% growth it saw in the prior year, which had benefited from the 2024 UK general election.
IDS, which comprises Royal Mail and international parcels network GLS, said cost pressures include increased National Insurance contributions of about 120 million pounds and higher wage costs in its UK business.
Royal Mail saw parcel volumes jump 5% to 661 million in the first half, while addressed letter volumes, excluding last year’s elections, fell 10%. GLS parcel volumes rose 3% to 460 million.
Election periods typically drive volumes for Royal Mail, owing to the surge in political mailings, postal ballots and official polling cards delivered to households nationwide.
Despite the slower growth, the company aims to expand its network to 45,000 Royal Mail parcel points by 2030 and increase GLS parcel points beyond the current base of 125,000, CEO Martin Seidenberg said.
Czech billionaire Daniel Kretinsky’s EP Group closed its acquisition of IDS in June after committing to protect the more than 500-year-old Royal Mail and its workers and customers.
($1 = 0.7451 pounds)
(Reporting by Raechel Thankam Job in Bengaluru; Editing by Vijay Kishore)
