Royal Mail total revenue down 4.0% year on year in the first quarter
International Distributions Services plc have provided an update on the Group’s trading in the first quarter of FY2023-24.
Key points:
• Royal Mail total revenue down 4.0% year on year in the first quarter, as expected. Domestic parcel volumes broadly as expected, with slightly weaker revenue performance due to price/mix and lower test kit volumes.
Focus remains on improving quality of service including targeted recruitment, effective management of sick absence and deployment of a “nerve centre” to support most impacted units;
• Addressed letter volume more robust than expected, which combined with pricing actions led to stronger revenue performance, particularly in business mail. However, addressed letter volumes down 30% since pre pandemic, highlighting the need for Ofcom and Government to take urgent action to reform the Universal Service.
• Welcome result of CWU ballot on Business Recovery, Transformation and Growth Agreement: 76% yes vote on the highest ever turnout for a CWU consultative ballot (67%); planning commenced for further revisions to improve productivity and quality of service; progressing with trials to underpin indoor method changes programme; new attendance standards and sick pay arrangements from 1 August.
• GLS revenue growth 7.4% year on year in the first quarter, (4.3% in Euro terms, including acquisitions and working day negative impact of c. 1%); volume growth of 4%, slightly ahead of expectations, offsetting impact of lower fuel surcharges and weaker freight revenues; economic backdrop mixed across different markets; investing in automation and other productivity measures to mitigate expected margin pressures.
• Outlook: unchanged, still targeting Group adjusted operating profit in 2023-24 (before voluntary redundancy costs in Royal Mail).
