Royal Mail sees 6pc Christmas rise

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Royal Mail handled 130 million parcels in December – six per cent more than 2014, and for the first nine months of its financial year UK parcel volumes were up four per cent on the year before.

CEO Moya Greene said: “Once again, our postmen and women delivered a great Christmas – even better than last year’s strong performance… Extensive planning, which began in the spring, ensured we had the capacity to accommodate additional volumes from our retail customers and other delivery operators.”

But revenue in UKPIL, the core letters and parcels division, was down one per cent for the first nine months. Although parcels revenue was up one per cent, this was offset by a two per cent fall in letters revenue.

In a trading statement, the group said that parcel volume growth continued to be driven by Royal Mail account parcels, which benefitted from recent new contract wins, import parcels, and Parcelforce Worldwide, which saw volumes increase by 16 per cent. Growth in these channels has more than offset the tough trading environment in consumer/SME and export parcels.

“Parcel revenue was up one per cent due to the impact of the competitive environment and the trends in mix. We continue to see the impact of higher volumes of lower AUR import parcels, largely from China, and lower volumes of higher AUR consumer/SME and export parcels, due to increased competition in these segments and a foreign exchange-driven impact on the export/import mix.”

GLS, Royal Mail’s European distribution network, performed better than expected, it said, benefitting from a good performance over the peak period. GLS Italy and GLS Poland delivered particularly good performances in the first nine months.

“While profitability in GLS Germany continues to be impacted by the German minimum wage legislation, overall profitability is benefitting from good volume-related revenue growth in most of GLS’s markets.”

Greene said Royal Mail remained on track to deliver at least a one per cent reduction in underlying operating costs before transformation costs in UKPIL for the full year.

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