Royal Mail delivers strong performance as revenue grows 1% over Christmas

Royal Mail delivered a solid performance in the nine months to December, as its results met market forecast after it posted a slight gain revenue on the back of a strong display from its logistics division.

In the nine months to 27 December, the FTSE 100 group said overall group revenue grew 1% year-on-year, driven higher by a 10% increase in revenue in the group's General Logistic System's (GLS) division, which offset a 1% decline in the UK Parcels, International & Letters (UKPIL) business.

The drop in revenue in the latter was attributed to a 2% slide in letter revenue, which offset a 1% increase in parcel revenue, Royal Mail said. Overall parcel volumes grew 4% in the period, partly thanks to the Christmas season, although group parcel revenue was only up 1% when compared with the same period in 2014.

In a trading update released on Thursday (21 January), the company said increased competitionsand currency headwinds had all contributed to weigh down on revenue in its parcel business, while in the addressed letters business, volume and revenue declined 3% and 2% respectively.

Royal Mail added it had made a number of investments to improve its technological capabilities, including the acquisition, completed in November, of same day parcel delivery group eCourier and the acquisition of NetDespatch, a software solution provider specialising in parcel data management and labelling for retailers and parcel carriers.

The group reiterated its full-year guidance, indicating it did not forecast any decline in margins for its GLS business and adding it remained on track to deliver at least a 1% reduction in underlying operating costs before transformation costs in UKPIL for the full-year.

"Once again, our postmen and women delivered a great Christmas - even better than last year's strong performance," said group chief executive Moya Greene.

"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."