Royal Mail: parcel volumes up 6%, letters down 5%

Royal Mail has reported that its parcel volumes were up 6% and letter volumes down 5% for the nine months up to 24 December.

In a trading update issued today (18 January), Moya Greene, the Chief Executive Officer of Royal Mail, 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. Parcel volumes in the nine months were up 6%, with 149m parcels handled over the December trading period. Letters performance was better than expected with addressed letter volumes down 5%. GLS delivered another strong performance with volumes and revenue up 10%. Overall, Group revenue was up 2%.

“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.

“We have continued to make progress in talks with our 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.”

While parcel volumes up were 6%, revenue was up by 4% – which Royal Mail said reflected “trends in the international traffic mix with a decline in higher AUR consumer export traffic due to the competitive market”.

Royal Mail added: “In UK parcels, the overall trends in the first nine months were broadly unchanged from the first half. 

“Parcel volumes were up 6%, with growth largely driven by a good performance in Royal Mail account parcels. Royal Mail Tracked 24®/48® and Tracked Returns® services saw continued strong volume growth of 31%. 

“Our international parcels business continued to benefit from our new cross-border traffic initiative2 which accounted for around 2 percentage points of total parcel volume growth and around 1 percentage point of parcel revenue growth in the period. Outside of this initiative, we saw an increase in lower AUR import volumes, largely from Asia. 

“Parcelforce Worldwide volumes were up 2% benefitting from new customer wins.

“Total parcel volumes in the December trading period were 149m, up 6% over the same period last year.”

While letter volumes were down by 5%, the revenue decrease was 3%.

GLS saw a 10% increase in both volume and revenue. Royal Mail commented: “Revenue growth was achieved in all its main markets, with continued strong growth in Italy. Good growth was also seen in Denmark and Eastern Europe.”