Royal Mail parent IDS posts smaller annual loss on turnaround headway

A Royal Mail sign is pictured on a delivery lorry at the Mount Pleasant mail centre in London

(Reuters) -Royal Mail's owner on Friday posted a narrower annual pre-tax loss as its turnaround plan progressed, and the British post and parcel services firm announced a special dividend to be paid out if it completes a $4.4 billion takeover bid.

The parent company, International Distribution Services Plc (IDS), last week said it would agree to the takeover bid by Daniel Kretinsky's investment vehicle EP Group if a formal offer is made.

IDS' loss-making UK business Royal Mail has suffered several setbacks over the past few years – the loss of its 360-year monopoly to deliver parcels, strikes by postal workers, a cyber security incident, and a fine from regulator Ofcom for missed delivery targets. IDS also runs the international parcels network GLS, globally.

However, efforts to put its business back on track have been paying off, with IDS reporting a loss before tax of 75 million pounds ($95.52 million) for the year ended March 2024, compared with a loss before tax of 110 million pounds last year.

"In the last six months we have set Royal Mail on the right trajectory. We made good progress delivering our modernisation agenda and returned to growth in the second half," IDS CEO Martin Seidenberg said.

The company proposed a special dividend of 8 pence per share, conditional upon the completion of the transaction with EP Group.

IDS also said that while headwinds remained, Royal Mail was close to break-even in the second half of the year at the adjusted operating level, excluding voluntary redundancy charges.

In April, Royal Mail had urged Ofcom to speed up reforms proposed by the company and implement them by April 2025 at the latest to reduce costs by 300 million pounds per year. The proposals could lead to fewer than 1,000 voluntary redundancies.

($1 = 0.7852 pounds)

(Reporting by Aatrayee Chatterjee and Pushkala Aripaka in Bengaluru; Editing by Vijay Kishore and Shailesh Kuber)