Royal Mail first-quarter trading in line

Royal Mail said trading for the three months ended 26 June was in line with its expectations, with group revenue up 1% and UK revenue down 1%.

Parcel volumes in the first quarter were up 2%, driven by import parcels and Royal Mail account parcels as well as an improving trend in the consumer/SME segment.

Meanwhile, volume growth at Parcelforce Worldwide slowed to 2% due to a very strong prior period.

Parcel revenue was up 2%, reflecting the impact of initiatives across all our channels to improve our products and price mix.

Chief executive Moya Greene said: “We continue to face the challenges caused by the current low inflationary environment and our highly competitive markets. We remain, however, very focussed on operational and financial efficiency and delivering a high quality service for all our customers."

Addressed letter volumes fell by 2%, excluding the impact of political parties' election mailings, reflecting the timing of the return of direct delivery volumes in the prior period and certain mailings associated with the EU referendum. Excluding these one-off impacts, addressed letter volumes were down around 4%.

Total letter revenue was 3% lower due to the impact of low inflation and continued trends in downtrading.

The company said its overseas parcels business, GLS, continued to perform well, with volumes and revenue both up 13%.

Royal Mail pointed out that movements in gross domestic product are drivers for letter and B2B parcel volumes and said it was “monitoring the situation”.

As far as the Ofcom review is concerned, the group said it was actively participating in the consultation process and will be providing a submission to Ofcom. Back in May, the regulator decided not to impose new price controls on Royal Mail but rather tighten rules on the company in the ‘access’ market.