AN UNEXPECTED drop in Royal Mail parcel revenues announced yesterday is likely to build more pressure on the company ahead of its annual general meeting tomorrow.
Royal Mail saw a one per cent decline in parcel revenues in the first three months of the financial year to 29 June, and it expected full-year parcel revenues to be lower than anticipated, hitting its share price as it fell 3.43 per cent to close on 450p yesterday.
Royal Mail blamed strong competition from rivals “aggressively reducing prices”. It highlighted Amazon’s cut to the minimum order level for free delivery and the expansion of the huge online retailer’s delivery network as significant factors behind the drop in parcel revenues.
Moya Greene, Royal Mail chief executive, said: “Our parcels revenue will be dependent on our performance in the second half, which includes the Christmas trading period, and on no further weakening in our addressable UK parcels market.”
Group revenues were still up two per cent over the period in line with expectations, as price increases produced a three per cent rise in UK letter revenues despite a three per cent drop in volumes. That, together with cost control measures, helped to offset the impact of the disappointing parcel results.
Revenues at Royal Mail’s European delivery service GLS rose six per cent during the period. Last week, GLS in France was revealed to be being investigated along with rival delivery firms by French competition authorities.