Royal Mail posted its strongest UK revenue in five years of £5.2bn, up by 5.1%, but profit before tax fell amid a challenging operational environment. In its half-year report for the 26 weeks to 29 September 2019, group CEO Rico Back warned of revenue and cost headwinds for the group's UK business in 2020-21 as it invests to transform its business model. Profit margin was 3.2%, down from 3.9% for the same period in 2018. Earnings per share fell to 11.1p, from 13.6p in the same period a year earlier. "The outlook, excluding elections, for the letters business in the UK is challenging," said Back. Letter volumes are expected to continue to decline by 7-9% in 2019-20, and by 6-8% in 2020-21. "We are investing more because of the industrial relations environment, the general election and Christmas, to underpin our quality of service at this key time," said Back. "This is likely to impact our productivity for the remainder of the year. When combined, revenue and cost headwinds could possibly result in a break-even or loss-making position for the UK business in 2020-21."
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