International Distributions Services PLC (LSE:IDS) swung into the red as strike action at Royal Mail saw reported losses at its postal delivery arm top £1bn, prompting the firm to write down the value of this division.
On a reported basis, the FTSE 250-listed firm posted revenue in the year to 31 March 2023 of £12.04bn, down 5.3% from £12.71bn a year prior, alongside an operating loss of £748mln compared to a profit of £577mln the year before.
This comprised a reported loss in Royal Mail of £1.04bn compared to a £250mln profit a year earlier and a profit at its logistics arm GLS of £296mln, down from £327mln.
IDS said on an adjusted basis Royal Mail's operating loss of £419mln compared to a £416mln profit due to industrial action, an inability to deliver planned productivity improvements, lower test kit volumes and a weaker online retail market, partly offset by actions to cut costs.
IDS said excluding voluntary redundancy charges, adjusted operating losses of £386mln were in line with revised guidance.
GLS adjusted operating profit of £348mln was up 1.8% year-on-year and slightly ahead of consensus, the firm said.
IDS took an impairment charge of £539mln as the carrying value of Royal Mail reduced to £900mln given the current risk backdrop and ongoing industrial dispute.
But it is targeting a return to profitability in Royal Mail over the remaining two years of the recently agreed pay deal, with a return to adjusted operating profit (before voluntary redundancy costs) in 2024-25.
At GLS revenue growth year on year is expected to be in the 3% to 5% range in the new financial year.
No dividend was paid.