Royal Mail plc (RMG.L) has issued a trading update covering the nine months ended 25 December 2016.
Moya Greene, Chief Executive Officer, Royal Mail plc, said: “Our postmen and women delivered a great service at Christmas, even better than last year, with 138m parcels handled in December alone. Our comprehensive planning, which started much earlier this year, enabled us to deliver this service for our customers right across the UK.
“Group revenue in the first nine months was in line with our expectations, with 9% revenue growth in GLS offsetting a 2% decline in UKPIL revenue. UK parcel revenue was up 3% with volumes up 2%. Total letter revenue was down 5% with addressed letter volumes, excluding elections, declining by 6%.
“Our cost avoidance programme is on track. We continue to target a reduction of up to 1% in underlying UKPIL operating costs before transformation costs in 2016-17.”
Trading performance for the nine months ended 25 December 2016
Group
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Change
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|
Revenue
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flat
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|
UKPIL
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Change
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|
Revenue
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(2%)
|
|
|
· UKPIL revenue was down 2%, with parcel revenue up 3% and total letter revenue declining by 5%.
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Parcels
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Change
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|
Volumes
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2%
|
|
Revenue
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3%
|
· Parcel volumes were up 2%, with growth largely driven by Royal Mail account parcels. Parcelforce Worldwide volumes declined by 1%, reflecting the very strong prior period and the increasingly competitive express parcels market.
· Parcel revenue was up 3%, with all our main channels delivering revenue growth. In particular, the consumer channel delivered volume and revenue growth.
· In international parcels, the rate of growth of import parcel volumes slowed but with an improvement in AURs as a result of our initiatives.
· We continued to see an improvement in the rate of decline of export parcel volumes, with growth in the third quarter.
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Letters
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Change
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|
Addressed letter volumes
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(6%)
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|
Revenue
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(5%)
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· Addressed letter volumes decreased by 6% (excluding the impact of political parties’ election mailings). However, letters performance in the prior period benefitted from the one-off return of direct delivery volumes and a good performance over the peak period. In particular, the third quarter last year was unusually strong.
· We are seeing the impact of overall business uncertainty in the UK on letter volumes, in particular advertising and business letters.
· Total letter revenue was down 5%. We have seen the impact of low inflation on pricing and we continue to be affected by ongoing trends in downtrading.
· We do not report marketing mail revenue on a quarterly basis due to the timing of the required survey data. However, the revenue trend in our main advertising products (which include retail addressed, unaddressed and access) was broadly similar to the first half.
GLS
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Change
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|
Volumes
|
8%
|
|
Revenue
|
9%
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· GLS continued to perform well. Performance in the period benefitted from the timing of Easter and other public holidays across Europe, which accounted for around one percentage point of the volume and revenue movements.
· Revenue growth was achieved in all key markets with the exception of Ireland, with continued strong growth in Italy.
· The recent acquisitions, ASM in Spain and GSO in California, are performing in line with expectations.