Royal Mail said on Tuesday (19 July) that trading in the first quarter of its financial year was in line with expectations, although it warned a low inflationary environment and highly competitive markets made trading difficult.

In the three months to 26 June, the FTSE 100-listed group posted a 1% year-on-year increase in revenue, as parcel volumes and revenue both rose 2% from the corresponding period last year. Royal Mail indicated the growth was driven by import parcels and account parcels, as well as an improving trend in the consumer and small businesses segment.

However, as anticipated by the company, Parcelforce Worldwide volume growth slowed to 2%, due to a very strong performance in the previous three months. The group added its UKPIL division saw revenue decline 1% year-on-year, while the GLS businesses performed strongly and benefitted from the timing of Easter and other public holidays across Europe, which accounted for around four percentage points of the volume and revenue movement.

Volumes and revenue within the division both increased 13% year-on-year. Meanwhile, addressed letter volumes and revenues declined 2% and 3% respectively, which the company attributed to ongoing low inflation and a slowdown in trading.

"We continue to face the challenges caused by the current low inflationary environment and our highly competitive markets," said group chief executive Moya Greene.

"We remain, however, very focussed on operational and financial efficiency."

Royal Mail, which last month announced the acquisition of the Spanish express parcels delivery company ASM Transporte Urgente by the Spanish subsidiary of GLS for €71m, added its outlook for the full-year was unchanged.