Isle of Man Post Office has posted a profit of more than £2m, a big improvement on the previous year which saw a return of £540,000.

The organisation has published its annual report and statutory board plan for 2024/25, which will be presented to Tynwald next month, which has revealed a profit of £2.58m.

Chief Executive Simon Kneen says the significant profit is largely down to a big increase in parcels despite a decline in letters. He also identified a £0.75m reduction in costs relating to the pension scheme and a £0.54m increase in interest income on cash reserves.

He says the decision to ditch the dedicated mail aircraft has increased capacity and a new automated parcel sorting machine is now fully operational. He also explained there is more stability after disruption because of a protracted industrial dispute at Royal Mail.

In the report he says: ‘This year we report a profit of £2.58m, a £2.04m increase on the prior period profit of £0.54m.

‘The increase in headline turnover from £24.2m to £25.4m, relates substantially to a £1.3m increase from our core mails division, reflecting a double digit increase in inbound parcel volumes, albeit offset by the continuation of letter volume decline.

‘The increase in parcel volume is attributable to the continued growth of e-commerce, the release of capacity restrictions following the cessation of the dedicated mail aircraft and restored retailer confidence following the resolution of the long running industrial dispute at Royal Mail, our key partner for inbound delivery volume.

‘Pleasingly, this volume growth was accommodated without materially increasing personnel costs, through use of capacity from falling letter volumes, and more pertinently, from efficiencies gained from our new parcel processing automation.’

But Mr Kneen issued a warning and says the profits enjoyed this year might not be sustainable.

He says: ’While our 2023/2024 financial performance is exceptional, it is essential to recognise that IoMPO’s commercial activities subsidise our ability to fulfil our statutory duties under the Post Office Act.

‘The outlook remains uncertain, and as such, the results for 2023/2024 should not be seen as a benchmark for a level of sustainable profit.

‘E-commerce growth is expected to slow, and there remains a number of material uncertainties on the horizon that will need careful management, and a clear focus on delivery of our strategy.’

Chairman of Isle of Man Post Office Stu Peters MHK is delighted with the organisation’s performance but has warned against complacency.

He said: ‘We are confident and enthusiastic about our direction of travel as we evolve our key commercial and strategic relationships with a keen focus on responding to the needs of our customers and stakeholders.

‘The business has demonstrated robust financial performance over the past year, with significant growth in revenue and profitability, and this has been testament to everyone at IoMPO who has shown unwavering commitment, diligence and enthusiasm during an exceptionally busy year.

‘However, while we have reported a profit, the year has not been without significant challenges, most notably high inflation and the removal of the dedicated mail plane.

‘It’s in this vein the Board remain cognisant of material challenges, such that the medium term looks uncertain, a situation which underpins the importance of seeing through on delivery of our strategic objectives.’