Royal Mail Completes Historic Service Overhaul and Returns to Profit
LONDON, 22 January 2026 – Royal Mail has concluded a transformative year, implementing the most significant changes to its universal service in decades while reporting a return to profitability for the first time in three years. The overhaul, which included scrapping Saturday second-class deliveries and relaxing performance targets, was enacted alongside a £3.6 billion takeover by Czech billionaire Daniel Kretinsky’s EP Group.
End of an Era for Six-Day Second-Class Post
The cornerstone of the reform, approved by regulator Ofcom, saw Royal Mail formally end its obligation to deliver second-class letters on Saturdays from 28 July 2025. Furthermore, second-class deliveries transitioned to an alternate-weekday model, meaning post is now delivered only three days per week in any given week. First-class mail retains its Monday-to-Saturday service. The changes were designed to save the company between £250 million and £425 million annually, adapting to a landscape where letter volumes have plummeted to less than a third of their level from two decades ago.
Revised Performance Targets and Regulatory Fines
Concurrent with the service changes, Ofcom relaxed Royal Mail’s legally binding delivery targets. The standard for first-class mail was lowered from 93% delivered the next working day to 90%. For second-class, the target within three working days fell from 98.5% to 95%. A new enforceable “backstop” was introduced, requiring 99% of all mail to be delivered no more than two days late, aimed at preventing the lengthy delays reported by some customers.
These reforms followed substantial fines for previous underperformance. Ofcom fined Royal Mail £21 million for missing its 2024-25 targets, after it delivered only 77% of first-class and 92.5% of second-class mail on time.
Financial Turnaround and New Ownership
The operational reset has coincided with a marked financial improvement. Royal Mail’s parent company, International Distribution Services (IDS), reported an adjusted operating profit of £278 million for the year ended 30 March 2025. Crucially, the Royal Mail division itself returned to an adjusted operating profit of £12 million, following losses of £348 million in 2023-24 and £419 million the year before.
This recovery unfolded under new ownership. The EP Group’s acquisition of IDS was completed in 2024, with the government retaining a “golden share” to protect Royal Mail’s brand, UK headquarters, and tax residency. Group CEO Martin Seidenberg stated the changes were necessary to create a “reliable, efficient and financially sustainable universal service.”
Key Facts at a Glance
| Aspect | Detail |
|---|---|
| Second-Class Delivery Model | Alternate weekdays only (e.g., Mon, Wed, Fri one week; Tue, Thu the next). No Saturday service. |
| New First-Class Target | 90% to be delivered next working day (reduced from 93%). |
| New Second-Class Target | 95% to be delivered within three working days (reduced from 98.5%). |
| Ofcom Fine (2024-25) | £21 million for missing previous delivery targets. |
| IDS Annual Profit (2024-25) | Adjusted operating profit of £278 million. |
| New Owner | EP Group, owned by Czech investor Daniel Kretinsky. |
Frequently Asked Questions
When did the new second-class delivery rules start?
The reformed universal service obligation, allowing the end of Saturday second-class deliveries and the move to an alternate-weekday schedule, took effect from 28 July 2025. The rollout across Royal Mail’s 1,200 delivery offices was phased over the following 12 to 18 months.
Has Royal Mail’s performance improved?
While the company has been fined for past performance, it states that ongoing modernisation—including hiring more staff, increasing parcel automation to 90%, and expanding its network of parcel lockers and collection points—is aimed at improving reliability. Early pilots of the new delivery model were reported to show measurable results.
What does the EP Group takeover mean for Royal Mail?
The new owner has provided legally binding commitments to maintain the universal service, keep the company’s headquarters and tax base in the UK, and not make compulsory redundancies for a set period. Management has emphasised the need to modernise the service to compete with rivals like Amazon and Evri.