Royal Mail underlying revenues up 1% in H1 2016 as gains in parcels offsets declines in letters


Royal Mail has reported that the UK arm of its parcels business increased its underlying volumes and revenues by 2% and 3%, while its European arm GLS saw figures of 10% and 9% respectively.

UK parcels growth was driven by growth in Royal Mail account and import parcels, while GLS’ gains were largely down to stronger export volumes, with growth in almost all markets. Royal Mail stated that UKPIL is seeing an improving trend in exports due to “movements in foreign exchange and increasing cross-border e-commerce.”

Letter volumes fell by 4% year-on-year, with revenues falling by 3%. Marketing mail revenue fell by 8%. Royal Mail asserted that uncertainty leading up to and after the EU Referendum led to a reduction in overall UK marketing activity.

In terms of profitability, its adjusted operating margin after transformation costs was 5.7%, an improvement of 4.0 basis points. GLS operating profit was up by 25% on an underlying basis.

Commenting on the state of the market, Royal Mail remarked, “The key drivers for the UK letters and parcels markets remain unchanged. Letter volumes, particularly advertising letter volumes, are linked to movements in GDP. We are monitoring developments in the UK economy closely as we have already seen some impact of the softer economic conditions on our marketing mail revenue. Growth in e-commerce is the key driver for B2C parcel volumes but the parcels market remains highly competitive, particularly in the international space.”

Source: Royal Mail

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