TIDMRMG
RNS Number : 5587E
Royal Mail PLC
19 July 2016
19 July 2016
ROYAL MAIL plc
TRADING UPDATE FOR THE THREE MONTHS ENDED 26 JUNE 2016
Royal Mail plc (RMG.L) today issued a trading update covering
the three months ended 26 June 2016. Overall, trading in the period
was in line with our expectations.
Moya Greene, Chief Executive Officer, Royal Mail plc, said:
"In what is traditionally a quieter trading period for the
business, we saw no material change in overall trends. Group
revenue was up 1% while in the UK revenue was down 1%. In Europe,
GLS continued to perform well.
"We continue to face the challenges caused by the current low
inflationary environment and our highly competitive markets. We
remain, however, very focussed on operational and financial
efficiency and delivering a high quality service for all our
customers."
Trading performance for the three months ended 26 June 2016
Group Change(1)
Revenue 1%
UKPIL Change(1)
Revenue (1%)
-- UKPIL revenue was down 1%, with parcel revenue up 2% and letter revenue down 3%.
Parcels Change(1)
Volumes 2%
Revenue 2%
-- Parcel volumes were up 2%, with growth driven by import
parcels and Royal Mail account parcels, as well as an improving
trend in the consumer/SME segment. As expected, Parcelforce
Worldwide volume growth slowed to 2%, due to a very strong prior
period.
-- In Royal Mail account parcels, we continued to see uptrading
to our tracked services improving the mix, as well as new contract
wins.
-- In international parcels, we continued to see the impact of
high volumes of lower AUR import parcels, largely from China, but
have started to see some positive impact from certain new
initiatives. Higher AUR export volumes continue to be impacted by
competition.
-- Parcel revenue was up 2%, reflecting the impact of
initiatives across all our channels to improve our products and
price mix.
Letters Change(1)
Addressed letter volumes (2%)
Revenue (3%)
-- Addressed letter volumes decreased by 2% (excluding the
impact of political parties' election mailings). This reflected the
timing of the return of direct delivery volumes in the prior period
and certain mailings associated with the EU referendum. Excluding
these one-off impacts, addressed letter volumes declined by around
4%.
-- Total letter revenue was down 3%, reflecting the impact of
low inflation, continued trends in downtrading, and declines in
high AUR consumer/SME and export letters. Revenue from political
parties' election mailings was similar to the prior period due to
increased activity around the EU referendum.
GLS Change(1)
Volumes 13%
Revenue 13%
-- GLS continued to perform well. Performance in the period
benefitted from the timing of Easter and other public holidays
across Europe, which accounted for around 4 percentage points of
the volume and revenue movement.
-- Revenue growth was achieved in all our markets.
Recent developments
On 25 May Ofcom published its proposals in respect of its Review
of the Regulation of Royal Mail. We are actively participating in
the consultation process and will be providing a submission to
Ofcom. Ofcom has indicated that it plans to issue a statement
before the end of the 2016-17 financial year.
The proposed CWU pay award of 1.6% for 2016-17 and the Unite pay
awards for junior and middle managers in Royal Mail of 1.6% from
September 2015 and 1.3% from September 2016 have been accepted.
On 20 June we announced the acquisition of the Spanish express
parcels delivery company, ASM Transporte Urgente (ASM), by the
Spanish subsidiary of GLS, for a total consideration of around
EUR71m. We also recently completed the acquisition of eCourier, a
leading same day delivery company in the UK.
Current trading and outlook
Overall, trading in the three months ended 26 June 2016 was in
line with our expectations, with no material change in overall
trends. Movements in GDP are drivers for letter and B2B parcel
volumes and we are monitoring the situation. We remain focussed on
operational and financial efficiency and delivering a high quality
service for all our customers.
The results for the half year ending 25 September 2016 are
expected to be announced on Thursday 17 November 2016.
Notes:
1. Movements in revenue and volume are on an underlying basis,
unless otherwise stated. Underlying change is calculated after
adjusting for working days in UKPIL, foreign exchange movements and
ASM in GLS, and other one-off items that distort the Group's
underlying performance. For volumes, underlying movements are
adjusted for working days in UKPIL and ASM in GLS and exclude
political parties' election mailings in letter volumes. In the
first three months of 2016-17 there were 75.6 working days in UKPIL
(3M 2015-16 74.8). We estimate that the impact of working days in
UKPIL will be around GBP65m for the full year (2016-17 305.6;
2015-16 303). For comparison purposes all underlying adjustments
are made to the prior period.
Enquiries
Investor Relations
Catherine Nash
Phone: 020 7449 8183
Email: investorrelations@royalmail.com
Media Relations
Harshna Brahmbhatt
Phone: 0743 595 7464
Email: harshna.brahmbhatt@royalmail.com
Royal Mail press office out of hours: 020 3338 1007
Disclaimer
Figures presented in this trading update are not audited. This
trading update contains certain statements that constitute
"forward-looking statements". Such forward-looking statements
involve known and unknown risks, uncertainties and other factors,
which may cause the actual results, performance or achievements of
the Group or industry results to be materially different from any
future results, performance or achievements expressed or implied by
such forward-looking statements. Persons receiving this release
should not place undue reliance on any forward-looking
statements.
The Group disclaims any obligation or undertaking to update or
revise any forward-looking statements contained in this document to
reflect any change in its expectations or any change in events,
conditions or circumstances on which such statements are based
unless required to do so by applicable law, the Prospectus Rules,
the Listing Rules or the Disclosure and Transparency Rules of the
Financial Conduct Authority.
About Royal Mail plc
Royal Mail plc is the parent company of Royal Mail Group
Limited, the leading provider of postal and delivery services in
the UK and the UK's designated universal postal service provider.
UK Parcels, International & Letters (UKPIL) comprises the
company's UK and international parcels and letters delivery
businesses operating under the "Royal Mail" and "Parcelforce
Worldwide" brands. Through the Royal Mail Core Network, the company
delivers a one-price-goes-anywhere service on a range of parcels
and letters products. Royal Mail has the capability to deliver to
more than 29 million addresses in the UK, six days a week
(excluding UK public holidays). Parcelforce Worldwide operates a
separate UK network which collects and delivers express parcels.
Royal Mail also owns General Logistics Systems (GLS) which operates
one of the largest ground-based, deferred parcel delivery networks
in Europe.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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