Royal Mail share price: Postal service issues trading update

on Jan 22, 2015
Updated: Oct 21, 2019

British postal services firm Royal Mail (LON:RMG) today released a trading update for the nine months ended 28 December 2014.

**Highlights from the company’s statement:**
• UKPIL revenue was flat in the first nine months, with parcel and letter revenues now both flat year-on-year. We delivered a strong cost performance and continue to expect to hold underlying operating costs before transformation costs in UKPIL flat for the full year.
• Parcel volumes were up 3% in the first nine months, compared with 2% in the first half, supported by growth in import parcels. In account parcels, we have benefitted from the initiatives we introduced earlier in the year, successfully targeting new sectors of the market and benefitting from opening our network at the weekend. Parcel volumes in the month of December alone were around 120m, 4% more than last year. Parcel revenue performance has improved relative to the first half, which saw a 1% decline. There continues to be a highly competitive environment in all the major channels. Parcelforce Worldwide volumes were up 10%. Pricing continues to be under pressure due to the competitive environment in the express delivery parcel market.

• Addressed letter volumes decreased by 3% (excluding the impact of election mailings), better than our forecast range of a 4%-6% decline per annum, mainly due to the improvement in UK economic conditions this year. Letter revenue was flat, compared with up 1% in the first half, partially reflecting the diminishing impact of election mailings over the year.
• GLS performed well, continuing the trend seen in the first half. This reflects the attractiveness of our high quality deferred parcels offering. The change to the minimum wage came into effect in Germany at the start of 2015. It is too early at this stage to be able to determine the impact of this change on the German parcels industry but the impact on GLS Germany’s cost base could be significant.

Moya Greene, Chief Executive Officer, Royal Mail plc, said: “Our postmen and women delivered a great service over the busy festive period. Royal Mail delivered one of its highest ever quality of service performances for parcel delivery to our customers over the month. This is because we started to plan for Christmas in April, putting investment behind extra sorting capacity with 10 temporary hubs and training around 19,000 extra people. As a result, Royal Mail was able to provide customers with reliability, flexibility and high quality delivery at a competitive price.

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“As the UK’s biggest parcels carrier we are proud that so many people and businesses the length and breadth of the country trusted us to deliver their Christmas. We handled around 120m parcels in the month of December alone, 4% more than last year. Letters performed in line with our expectations, with addressed letter volumes down 3% in the first nine months. GLS, our ground-based European parcels business, continued to perform well.

“We are continuing to bear down on costs and expect that underlying operating costs before transformation costs in UKPIL will be flat for the full year. Given our performance over the Christmas period, we are confident that the outcome for the full year will be in line with our expectations.”
**More to follow…**
As of 07:09 GMT, Thursday, 22 January, Royal Mail share price is 430.50p.


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