Royal Mail owner International Distribution Services PLC (LSE:IDS) has warned of price hikes on a surge in costs due to higher employer national insurance contributions (NICs).
The FTSE 250-listed group said the increase, brought in through last month’s Budget, would lead to a £120 million uplift in the delivery firm’s NIC bill annually.
“As a major employer with around 130,000 permanent employees, the changes to national insurance will disproportionately impact our business,” chief executive Martin Seidenberg said.
He added this made reform to Royal Mail’s Universal Service Obligation, which requires it to deliver letters six days a week, “even more urgent”.
Royal Mail posted a £67 million loss for the first half, against £319 million a year earlier, as revenue climbed 10.7% to £3.9 billion.
IDS’ parcel delivery wing, GLS, saw profit fall 14.6% to £128 million in the meantime, leaving overall group profit at £61 million, compared to a £169 million loss a year ago.
A £22 million cost had also been incurred over the first half in relation to the company’s proposed takeover by Czech billionaire Daniel Kretinsky’s EP Group.
“These costs mainly relate to the provision of financial and legal advice,” IDS said, with the takeover having faced scrutiny over security concerns since its agreement in May.
Shares dipped 0.9% on Thursday.