Isle of Man Post Office saw profits plunge by just under £1m last year.

It has reported a profit of £0.54m for the 12 months up to March 26 this year, compared to £1.53m the previous year.

Turnover increased marginally from £23.5m to £24.2m.

But this was largely thanks to a £2.7m increase in foreign exchange sales as customers resumed travel abroad after the pandemic and which masked a £1.9m fall in turnover from core operations.

The authority said the results were better than anticipated, and the reduction in operational turnover and profitability was in line with expectations.

Its mails division reported an 11% decrease in turnover, with letter volumes down by 13% and parcel volumes down 18%.

The Post Office said the decline in letter volume is ‘inherent’, but the significant fall and seasonal volatility in parcels was ‘contrary to trend’ – but expected given the cost of living crisis.

Isle of Man Post Office returned to profit in 2020-21 after posting three years of losses.

Its turnaround then was attributed to increased parcel volumes during the Covid pandemic, but also reforms which included reducing letter deliveries from six to five days a week and bringing in new employment terms and conditions, including major changes to the pension scheme.

Chairman Stu Peters said it was a ‘great pleasure’ to report a profit for the third consecutive year.

He said: ‘This is a result of the work being done on the modernisation strategy by our hardworking team, and a great result given the cessation of a peak in volumes seen during the pandemic, and the severe economic headwinds we continue to face.’

The Post Office said the ‘gig economy’ continues to negatively impact the business, as it unable to compete on a level footing, with competitors using self-employed parcel couriers paid ‘per item’, significantly lowering their costs.

Retail counters saw turnover increase during the year from £2.74m to £5.44m with this figure including gross foreign exchange sales of £3.9m, up from £1.29m the previous year.

The Post Office board said it acknowledged the political will to sustain the current network of sub-post offices, with the social security division and Department of Infriastructure expected to continue to require face to face counter services for the next two to three years.

It said this has provided the independent retailers who provide counter services with the certainty they have been seeking for some time.