Royal Mail revenue up following strong Christmas performance

By Richard Stuart-Turner, Thursday 18 January 2018

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Royal Mail has reported a group revenue increase of 2%, driven by a “good performance” over Christmas.

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Royal Mail handled 149 million parcels over the December trading period

In a trading update issued today (18 January) for the nine-month period ended 24 December 2017, the group said revenues in its UK Parcels, International & Letters (UKPIL) division were flat, with parcel revenue – which increased by 4% – offsetting total letter revenue, which was down by 3%.

Parcel volumes grew by 6% over the first three quarters, with 149 million handled over the December trading period alone, while addressed letter volumes fell by 5%.

The group’s European parcels business General Logistics Systems (GLS) saw both volume and revenue increases of 10%. Revenue growth was achieved in all of its main markets, with continued strong growth in Italy, while good growth was also seen in Denmark and Eastern Europe.

Royal Mail chief executive Moya Greene said: “We have had a good performance over the important Christmas period thanks to the hard work and dedication of our people. They pulled out all the stops to deliver a great Christmas for the UK.

“We remain the number one facilitator of e-commerce in the UK due to our significant investments to improve our customer offering.”

She added: “Given our performance to date, we expect to see broadly similar volume and revenue trends in UK parcels and letters for the full year as in the nine months. In GLS, we expect underlying revenue growth for the full year to be broadly in line with the first half.”

But the group warned that continued cost pressures due to labour market conditions in many of GLS’ European markets, as well as in the US, may slightly impact margins in GLS this year.

Greene said the group has also continued to make progress in talks with its unions on pay, pensions and the other issues under discussion.

“We have agreed the fundamental principles on some of the key issues and talks are ongoing to finalise these and other areas.

“We believe we can reach agreement on an affordable and sustainable pension solution and a pay deal that will enable us to continue to innovate and grow.”

The group had issued an update on recommendations for worker pensions and pay last month, having halted a planned 48-hour Communication Workers Union strike in October.

Royal Mail’s results for the full-year ending 25 March 2018 are expected to be announced on 17 May 2018.

The group’s share price dropped from 467p to 461.8p following the release of the trading update, and stands at 459.1p at the time of writing.

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