Letters decline offsets parcel growth at Royal Mail

Royal Mail’s domestic parcels revenue was up six per cent in the first quarter – but this was offset by a seven per cent fall in letters revenue, the group has revealed in a trading update.

As a result total revenue at UKPIL, its domestic parcels and letters business, was down one per cent on a year ago.

Parcel volumes were up seven per cent, largely driven by higher volumes from retailer account customers.

Parcelforce Worldwide volumes were up four per cent benefitting from better than expected volumes from contract customers. However, due to a customer withdrawing from the market, we do not expect this level of performance to continue throughout the remainder of the year.

Total parcel revenue was up six per cent, reflecting trends in the domestic traffic mix.

GLS continued to perform strongly, with volumes up ten per cent and revenue up 11 per cent. Revenue growth was achieved in almost all markets, with continued strong growth in Italy, Denmark and Spain. Poland, where it has opened three new depots in response to demand. The other Eastern European businesses all saw double digit revenue growth in the period.

“Overall, trading in the first three months of our 2018-19 financial year was in line with our expectations,” said the group’s new chief executive Rico Back.

“Our performance in UK letters and parcels was as anticipated and GLS continued to perform strongly. In the UK, we are making progress with the trials and initiatives under our new Pensions, Pay and Pipeline agreement. We, together with the CWU, are working with Government to enable the introduction of a Collective Defined Contribution scheme.

“Our outlook and other guidance are unchanged from that set out in our financial report for the full year ended 25 March 2018.”