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Royal Mail owner IDS returns to profit but warns on cost environment
Global Banking & Finance Review®
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(Reuters) -International Distribution Services reported a first-half adjusted operating profit on Thursday, as sustained parcel demand helped the British firm narrow losses at its
(Reuters) -International Distribution Services reported a first-half adjusted operating profit on Thursday, as sustained parcel demand helped the British firm narrow losses at its Royal Mail business despite a weaker-than-expected market.
Royal Mail’s reported losses include an impairment charge, chiefly due to expected additional tax burden reflected in an about 120 million pound annual increase in employers national insurance from fiscal 2025-26.
Royal Mail employs about 130,000 people in Britain.
“We are delivering on the changes we can control, but the cost environment is worsening just at the time when we need to invest,” CEO Martin Seidenberg said in a statement, referring to the increase in national insurance.
The group, which also owns international parcels network GLS, said its adjusted operating profit was 61 million pounds ($77.13 million) for the six months ended Sept. 26, compared to a loss of 169 million pounds a year earlier.
IDS, which agreed to a 3.57 billion pound takeover by Czech billionaire Daniel Kretinsky in May, said it continued to expect the deal to close in the first quarter of 2025.
Kretinsky’s bid of IDS, the owner of one of the world’s oldest postal firms Royal Mail, is currently being reviewed under the National Security and Investment Act to assess any potential concerns. ($1 = 0.7908 pounds)
(Reporting by Yadarisa Shabong in Bengaluru; Editing by Subhranshu Sahu)
Adjusted operating profit refers to a company's earnings before interest and taxes, adjusted for one-time items, providing a clearer view of ongoing operational performance.
An impairment charge is a reduction in the book value of an asset when its market value falls below its carrying amount, indicating a loss in value.
A takeover agreement is a legal arrangement where one company acquires control over another company, often involving negotiations and regulatory approvals.
Corporate tax is a tax imposed on the income or profit of corporations, typically calculated as a percentage of the company's taxable income.
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