Royal Mail has reported slightly improved revenues for the first quarter – but is still locked in a battle of wills with unions about the future of its pension scheme.
In a trading update this morning Royal Mail said revenues had risen one per cent in the three months to the end of June, despite its UK Parcels, International and Letters (UKPIL) division, which comprises the Royal Mail and Parcelforce brands, falling one per cent.
However, overall parcel volumes rose five per cent, while revenues in its parcels division rose three per cent. Letters, meanwhile, continued their steady decline, with volumes falling six per cent while revenues fell four per cent.
Revenues at GLS, its parcel delivery service, rose six per cent (or 18 per cent including the impact of recent acquisitions), while volumes rose five per cent.
Why it's interesting
Could things finally be turning around for Royal Mail, which has not only suffered in recent years from the rise of email, but was also hit hard when Amazon decided to deliver its own parcels, rather than relying on external companies?
Perhaps. In recent months the company has been locked in a standoff with unions over its pension scheme, which it said in January it wanted to close after it worked out the scheme could eventually cost it £1bn a year. Unsurprisingly, unions have been resistant: on Sunday Tom Pullinger, the deputy general secretary of the Communication Workers' Union, said talks over the scheme's closure had reached an impasse. Today, though, the company seemed cautiously optimistic, saying it "continue[s] to discuss future pension arrangements with the CWU".
Meanwhile, Royal Mail has also announced plans to sell two of the seven plots at its Nine Elms site for £101m, while the company admitted last month it was in talks to sell its Mount Pleasant sorting office site, a deal which has been in the offing for years.
And it had one ace up its sleeve: the General Election, which slowed the decline of its letters volumes by around one percentage point, it said. So at least the election was good for someone...
What Royal Mail said
Chief executive Moya Greene said:
Overall, we have had a good start to our financial year. Group revenue was up one per cent, driven by another strong performance in GLS. This more than offset a one per cent decline in UKPIL revenue.
GLS continues to be a driving force for the group. Its ongoing, focused international expansion is increasing our geographic diversification, scale and reach. In UK parcels, our quality of service and improved product offerings are driving high levels of customer satisfaction and attracting new customers and higher volumes. Our performance in letters was better than we expected, despite continued business uncertainty in the UK.
We remain on track to deliver our cost avoidance and net cash investment targets for the full year.