By Cristina Gallardo
Royal Mail owner International Distribution Services posted a small pretax profit, and warned rising U.K. taxes will affect its future results.
The U.K. postal and logistics company said Thursday that it made a pretax profit for the six months to Sept. 29 of 4 million pounds ($5.1 million) compared with a pretax loss of 194 million pounds in the same period a year ago.
The group also posted a net loss of 25 million pounds, a reduction compared with the net loss of 223 million pounds reported for the first half of 2023.
Chief Executive Martin Seidenberg said an increase in the U.K. national-insurance contributions--announced by the British government a month ago--will disproportionately affect the business compared with its competitors, because it is a bigger employer with around 130,000 permanent employees. The group warned this will be felt in the results of its fiscal year 2025-26.
IDS's most recent performance has also been hindered by rising living costs in Britain and tougher macroeconomic conditions in Germany and Italy, two of its GLS business's larger markets, he said.
"We are delivering on the changes we can control, but the cost environment is worsening just at the time when we need to invest," Seidenberg said.
Revenue grew to 6.34 billion pounds from 5.86 billion pounds in the comparable period, with higher revenue at Royal Mail and GLS.
The group reported an adjusted operating profit--the company's preferred metric, which strips out exceptional and other one-off items--of 61 million pounds compared with an operating loss of 169 million pounds in the first half of the prior year.
IDS had been expected to post a pretax profit of 5.27 million pounds, a net profit of 4 million pounds, adjusted operating profit of 141 million pounds, and revenue of 6.08 billion pounds, according to consensus estimates provided by Visible Alpha.
The group said it had delivered a good performance over the six-month period. It expects Royal Mail--which reported an adjusted operating loss of 67 million pounds--to return to profit, before voluntary redundancy costs, in fiscal year 2024-25.
IDS in May accepted to be bought by Czech billionaire Daniel Kretinsky's EP Group for 3.57 billion pounds, but the bid was suspended in August to allow U.K. officials to scrutinize the offer.
On Thursday, IDS said it still expects the takeover proposal to become or be declared unconditional in the first quarter of 2025.
Write to Cristina Gallardo at cristina.gallardo@wsj.com
(END) Dow Jones Newswires
November 21, 2024 03:01 ET (08:01 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
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