High volumes of political mail in the run-up to May’s snap election helped to slow the decline in Royal Mail’s UK business during its first quarter, but the company still relied on its overseas businesses to register overall revenue growth.
Revenues from UK letters in the three months to June 25 were 4 per cent lower than the same period last year, but the company said this would have been worse were it not for “higher than expected revenue associated with the UK political parties’ 2017 general election mailings”.
Growing revenues from parcel deliveries also helped to offset some of the decline in letters, and total revenues from the UK business slipped 1 per cent.
The FTSE 100 group has been battling a structural decline in paper-based correspondence, and is shifting its focus to parcel deliveries which have benefited from the growth of online shopping.
Its UK business also faces shorter-term challenges in the form of economic uncertainty, which has reduced letter volumes, and the threat of strike action due to a dispute over pensions.
Last week the company made a new pension offer to staff after announcing it would close its existing defined benefit scheme, but the union representing its frontline workers has maintained its opposition.
Royal Mail’s GLS business, which operates parcel delivery networks across Europe and North America, increased revenues by 6 per cent year on year. The overseas growth meant that overall revenues in the period increased by 1 per cent.
Moya Greene, Royal Mail chief executive, said:
GLS continues to be a driving force for the Group. Its ongoing, focussed international expansion is increasing our geographic diversification, scale and reach. In UK, parcels, our quality of service and improved product offerings are driving high levels of customer satisfaction and attracting new customers and higher volumes. Our performance in letters was better than we expected, despite continued business uncertainty in the UK.