Rico Back is quitting as Royal Mail Group CEO with immediate effect, the British postal group announced this morning in an update on how the COVID-19 pandemic is impacting its business operations and finances.
Royal Mail said: “The Board and Rico Back have agreed he will step down as Group CEO, and from the Group Board, with immediate effect. Keith Williams becomes interim Executive Chair of Royal Mail Group and Stuart Simpson becomes interim CEO of Royal Mail (UKPIL).”
Williams, currently the board chairman, will remain interim Executive Chair until a new CEO is appointed.
Back, who leave Royal Mail on 15 August 2020, was appointed Group CEO in June 2018. He started his career in Royal Mail's parcels operation, General Logistics Systems (GLS) in 1989. In 2016 he became responsible for the entirety of Royal Mail Group's parcels and international business and was appointed to Royal Mail's Chief Executive Committee.
Williams said: "Rico Back has made a significant contribution to the evolution of our business over his 20 years with us, particularly in building our international parcels business and developing our Group strategy, which recognised the urgent need for change to create a sustainable business for the future. On behalf of the Board, I would like to extend my thanks to Rico and wish him well in the future."
Back commented: "It has been a privilege to lead a company that is so much a part of UK life at this crucial time in its history. I am proud of what I, together with our dedicated and loyal team, helped to build in Royal Mail and GLS. I look forward to seeing Royal Mail transform into a parcels-led, international delivery company, that continues to touch the lives of millions across the world."
UK parcels soar but revenues drop during pandemic
Disclosing how the COVID-19 pandemic is impacting on business, Royal Mail said UK revenues dropped by £22 million in April compared to the same month last year. Key developments include:
- Substantial switch from letters to parcels in the UK. UK parcels volume up 31% and revenue up 20%.
- 308 million fewer addressed letters (down 33%). Letter revenue down 23%, offset, in part, by 36 million more parcels.
- UKPIL costs up £40 million, driven by overtime and agency resource costs due to high levels of absence, the introduction of social distancing measures and PPE.
- GLS situation still evolving. Shift from B2B to B2C parcels across all markets in the UK and overseas.
- Significant volatility in parcel volumes as COVID-19 pandemic has developed across key markets.
Bonus payments for frontline operational staff
In recognition of the role played by frontline staff during the COVID-19 pandemic, the group will pay out around £25 million as a cash bonus. Frontline colleagues who, since March, have been at work throughout the crisis will receive a cash recognition award of up to £200 in June. In parallel, there will be no bonuses for Executive Directors for 2019-20.
The main impacts of the pandemic on operations include:
- Royal Mail is continuing to deliver to 30 million households across the UK, fulfilling a vital role with respect to the collection and delivery of parcels, home testing kits and Government information.
- UK absence has fallen from a peak of over 20% to 11% currently. Just under £40 million has been committed to spend on PPE. Fewer than 200 people are on the Government furlough scheme.
- In response to employee feedback, and the pronounced shift from letters to parcels, we have implemented a temporary relaxation of the Universal Service, with five-day letter delivery. Saturday deliveries are scheduled to resume on 13 June 2020.
In terms of the group’s overall finances, Royal Mail emphasised that its liquidity position remains strong. Total liquidity (including undrawn facilities) is around £1.8 billion and the group has the ability to access the UK’s Covid Corporate Financing Facility (CCFF), if required. No bonuses will be paid to Executive Directors for 2019-20.
Looking ahead, Royal Mail Group said: “Following engagement with key stakeholders on a package of potential measures for the UK business, we will provide a further update on 25 June 2020, along with Full Year Results 2019-20, to cover possible outcomes for 2020-21, together with actions to: i) mitigate the impact of COVID-19; ii) minimise losses in UKPIL; and iii) ensure a sustainable long-term business.
