Royal Mail updates on Q1
Wednesday, July 21, 2021
Royal Mail has reported strong sales in the three months to 30 June in a trading update alongside its AGM.
The group has provided comparisons with its Q1 trading in the 2019-20 and 2020-21 financial years for context and trends pre- and during the Covid-19 pandemic.
Chairman Keith Williams said: “For Royal Mail, as expected, parcel volumes decreased and letter volumes increased compared to the exceptional period last year encompassing the UK's first lockdown, when non-essential retailers closed for the first time. We are starting to see evidence that the domestic parcel market is re-basing to a higher level than pre-pandemic, as consumers continue to shop online.”
He said that as pandemic restrictions eased there was “still uncertainty” about levels of Covid transmission, and the impact on consumer behaviour and economic factors.
Group revenue rose by 12.5% vs Q1 2020-21 and by 20.2% compared to Q1 2019-20.
At Royal Mail sales were up 12.2% vs Q1 2020-21 and increased by 13.4% vs Q1 2019-20.
The surge in parcel volumes in Q1 last year caused by the pandemic has calmed, with volumes down 13% vs Q1 2020-21, although volumes are still up 19% compared with Q1 2019-20.
Parcel revenues were up 3.4% vs Q1 2020-21 and jumped by 36.2% vs Q1 2019-20.
Addressed letter volumes (excluding elections) grew by 22% vs Q1 2020-21, but were down 18% compared with Q1 2019-20.
Royal Mail’s total letter revenue increased by 25.7% vs Q1 2020-21, but decreased 6.6% vs Q1 2019-20.
“We continue to expect fluctuations in volumes as we emerge from Covid restrictions, which we will need to manage accordingly. Nonetheless we are encouraged by the revenue performance across Royal Mail and GLS in the first quarter, and notwithstanding the current uncertainty, remain confident about the full year,” Williams stated.
At overseas parcels wing GLS sales were up 12.4% year-on-year and volumes grew “albeit at a slower rate, due to the exceptionally strong comparators from the same period in 2020-2”.
Royal Mail said it was on track to make non-staff related costs savings of £110m and was continuing to make good progress with the CWU Pathway to Change agreement.
The group is also benefiting from new business in fresh services such as Sunday parcel deliveries where it has expanded its relationship with Moonpig, and its Parcel Collect doorstep parcel collection offering.
Royal Mail’s share price slipped by 3.2% to 513.6p on the news.