Royal Mail owner defends service quality amidst criticism

What happened: Royal Mail, owned by EP Group, missed its annual delivery targets, with nearly a quarter of first-class mail arriving late. Under new ownership since 2023, Royal Mail's on-time delivery for first-class letters stood at 75.7%, far below its 93% target. The company plans to invest £500m to improve services, including reducing second-class deliveries and encouraging part-time workers to increase hours. Despite criticism, EP Group's owner, Daniel Kretinsky, defended service quality before MPs.

Market impact: The postal sector faces regulatory pressure and potential fines due to persistent service issues. Royal Mail's share price has declined by 15% year-to-date, reflecting investors' concerns about service quality and price increases. The price of first-class stamps rose to £1.80, impacting consumers and businesses that rely on postal services.

What to watch next: Royal Mail's interim results, due in November, will provide an update on its service improvement plans and financial performance. Ofcom's investigation into Royal Mail's missed delivery targets is ongoing, with a potential fine expected by year-end. The outcome of this investigation will determine the regulatory environment for Royal Mail and the broader postal sector.