Royal Mail today announced it increased its UK parcel volumes by 6% in the December peak season and by 4% over the first nine months of the 2015/16 year while European subsidiary GLS generated 11% volume growth over the nine months.
The British postal group increased overall revenues by 1% in the April – December period, including a 1% drop in UK revenues. Letter revenues fell by 2% on a 3% volume decline, it said in a nine-month trading statement. “We remain on track to deliver at least a 1% reduction in underlying operating costs before transformation costs in UKPIL for the full year,” it stated.
The UK parcel business increased revenues by 1% and volumes by 4% over the nine months. Peak volumes in December grew by 6% to 130 million parcels, which was well behind the high double-digit growth rates of rivals Hermes and DPD but ahead of Yodel.
“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%. Growth in these channels has more than offset the tough trading environment in consumer/SME and export parcels,” the company pointed out.
“Parcel revenue was up 1% 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.”
CEO Moya Greene said: “Once again, our postmen and women delivered a great Christmas – even better than last year’s strong performance. This is because of the commitment of our people and our investment in additional temporary staff and sorting capacity. Extensive planning, which began in the spring, ensured we had the capacity to accommodate additional volumes from our retail customers and other delivery operators.”
Meanwhile, European parcels unit GLS generated strong growth of 11% in volumes and 10% in revenues in the April – December period, benefitting from a good performance over the peak period. At country level, 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,” Royal Mail stated.
Greene commented: “In Europe, GLS performed better than expected with volumes up 11%. Given the performance to date, we are not anticipating a decline in GLS margins for the full year.”
She continued: “Overall, trading in the nine months ended 27 December 2015 fully met our expectations, with a good performance over our peak period in UKPIL as well as a better than expected performance in GLS.”
Royal Mail said its outlook for letter and parcel trends and other guidance were otherwise unchanged from that set out in the financial results for the half year ended 27 September 2015.
The results for the full year ending 27 March 2016 are expected to be announced on Thursday 19 May 2016.
