24th Jan 2014 13:17
LONDON (Alliance News) - Royal Mail PLC Friday reported a 2% increase in like-for-like revenues for the first nine months of its financial year driven by growth in its parcels revenues, but parcel revenue growth actually slowed in the third quarter which contains Christmas.
The recently privatised company said parcel volumes were flat for the whole nine months as its new size-based pricing meant some customers decided not to send some larger items via Royal Mail. Overall, like-for-like parcel revenues were up 8% over the nine months to end-December, driven by the new pricing structure.
However, Royal Mail had reported a 2% rise in total revenues for the first half of the year, and a 9% rise in parcels revenues, meaning revenue growth in its key business actually slowed during the Christmas quarter.
In recent weeks, retailers have reported a sharp increase in online sales around Christmas. While some of that was done via click-and-collect services, where shoppers buy online and then collect the goods from stores themselves, Royal Mail should have benefitted from the surge in online sales and resulting increase in parcels being sent out.
Rival UK Mail Group PLC earlier this month reported 15% growth in parcels volumes in the three months to end-December.
Royal Mail said it handled 115 million parcels in December, a like-for-like increase. However, it didn't give a comparative figure.
"We handled significantly more parcels than any other carrier in the UK parcel market," it said of the Christmas period.
Parcels now account for 51% of group total revenues. They also account for 41% of the revenues of its UK Parcels, International and Letters unit, up from 38% in the first nine months of its last financial year.
"We saw good growth in account parcel volumes, despite some customer reaction to possible industrial action, and Parcelforce Worldwide grew strongly. However, there were declines in consumer volumes, including large uneconomic items that exited the core network following the introduction of size-based pricing," it said in a statement.
Revenues and volumes in the company's letters business both fell, continuing a long-standing trend. It said like-for-like revenue was down 3% in the nine-month period, while addressed letter volumes were down 5%. The volume fall was better than the 6% decline reported for the first half of Royal Mail's financial year, thanks to a high level of energy company mailings in the third quarter.
The company, which only listed in the Autumn of 2013 in a high-profile privatisation, said it expects the trends to continue during the rest of the financial year and expects to deliver results "consistent with our key value drivers for the full year."
Costs in the first nine months of the year were "consistent with underlying performance in the first half," it added.
Royal Mail said it expects to report its full-year results May 22.
The company's shares were down 1.7% at 578.04 pence Friday afternoon.
By Steve McGrath; [email protected]; @SteveMcGrath1
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