EXTRA: Same Trends For Royal Mail As Political Mailings Balance Out

Royal Mail revenues from letters were 3% lower in the quarter but overall group turnover was 1% higher

Royal Mail revenues from letters were 3% lower in the quarter but overall group turnover was 1% higher

Group revenue rose 1% in what chief executive Moya Greene said was "traditionally a quieter period" for Royal Mail.

Group revenue, on an underlying basis, was up 1% while in the United Kingdom revenue was down 1%.

The group said changes in gross domestic product were key "drivers" for its letter and parcel business and confirmed it was " monitoring the situation".

Revenues from letters were 3% lower in the quarter, but overall group turnover was 1% higher in a "quieter trading period", according to Royal Mail.

She added Royal Mail continued to "face challenges" caused by high levels of competition and low inflation.

"We remain, however, very focussed on operational and financial efficiency and delivering a high quality service for all our customers".

The FTSE 100 company saw parcel volumes and revenues increase by 2% each, which it said was primarily driven by the growth of import parcels in an era of increased online shopping.

Addressed letter volumes fell by 2%, excluding the impact of political parties' election mailings, reflecting the timing of the return of direct delivery volumes in the prior period and certain mailings associated with the European Union referendum.

The fall in letter revenue reflected low inflation in the United Kingdom, continued trends in downtrading by customers and declines in higher-margin consumer, SME and export letters.

GLS, Royal Mail's pan-European logistics business, saw revenue grow 13% in the quarter, with volumes rising by the same amount.

Responding to the Trading Update, market analysts said that the results were "as expected", and they also speculated on what the future impact of Brexit might be for Royal Mail. "The effect of Brexit on consumer confidence is likely to have an impact on Royal Mail in the near term, and certainly parcel sales, which is something investors are watching carefully should guidance change in the near term".

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