The continued drop in letter-sending held back Royal Mail in the three months to 28 June, with revenue at the FTSE 100-listed company's core parcels and letters business falling two per cent, primarily thanks to a five per cent fall in the addressed letter volumes in the UK.
Even the benefit of the General Election and election mailing revenue couldn't prevent the drop.
Parcel volumes were up three per cent thanks to a 20 per cent increase in Parcelforce Worldwide – however, Royal Mail admitted the result reflected a "relatively weak comparative period last year".
Why it's interesting
Flat revenue in the quarter was expected by Royal Mail, but that says more about its own low expectations than any presumed satisfaction with such results.
Chief executive officer Moya Greene warned investors that the firm's trading environment remains "challenging" and thing weren't made any easier after Ofcom revealed the scope and scale of a review into the regulation of the company.
Shares in Royal Mail fell 3.5 per cent after Ofcom revealed it would ask stakeholders how much the Royal Mail's "pricing and non-pricing behaviour" was affected by rival operators and "assess the company's potential ability to set wholesale prices in a way that might harm competition".
What Royal Mail said
Chief executive officer Moya Greene said:
In the first three months of our financial year we have seen a continuation of the overall market trends we saw last year…
…Our trading environment remains challenging and we are stepping up the pace of change to drive efficiency, growth and innovation, while maintaining a tight focus on costs.
Although parcels remain popular, and Royal Mail's parcel delivery networks enjoyed growth, the company's reliance on letter sending – and the public's aversion to putting pen to paper – is holding back revenues.