Election helps Royal Mail narrow letters decline
Royal Mail has said it narrowed the decline in letter deliveries thanks to a boost from general election political mailings, but confirmed revenues remained under pressure.
The group said total letter revenues fell by a better-than-expected 4% in the three months to June 25 after the snap election that month.
But with the benefit of the political mailings stripped out, letter volumes still fell 6% in the group's first quarter.
Its UK parcels arm continued to help offset the ongoing decline in letters, with volumes up 5% and revenues up 3%.
This left overall underlying turnover from the letter and parcels arm 1% lower.
Its Europe-wide parcels business GLS continued to see solid growth, with underlying revenues up 6%, but with the benefit of recent acquisitions included, Royal Mail said turnover soared 18% in the quarter.
Royal Mail said the GLS performance helped drive a 1% rise in total group-wide underlying revenues.
Moya Greene, chief executive of Royal Mail, said the group had a "good start to our financial year".
She said: "GLS continues to be a driving force for the group.
"Its ongoing, focused international expansion is increasing our geographic diversification, scale and reach."
She added: "Our performance in letters was better than we expected, despite continued business uncertainty in the UK."
The update comes after Royal Mail last week sought to avert the threat of strike action by announcing a new proposal for pension scheme changes.
The privatised group had planned to close its defined benefit pension scheme next year, which resulted in fury from Unite and the Communication Workers Union (CWU).
But on Friday, Royal Mail said that after "extensive talks" with unions, Unite is planning to hold a consultative ballot of its members on a new plan, which it insisted was a "significant improvement" on an earlier proposal.
The changes will see it offer scheme members a choice between a new defined benefit cash balance scheme and an improved defined contribution scheme.
Shares in Royal Mail lifted 3% after the update.
Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: " Royal Mail has emerged as the one clear winner of last month's general election, with political mailings helping to slow the inexorable decline in UK letter volumes.
"UK parcels also looks like it's turning a corner with steady volume growth, albeit at lower prices than previously."
But he said the "wrangling" over the new pension scheme plans would remain a source of " uncertainty " for Royal Mail until all unions are on-side.
While Unite has said it believes the new pension proposal is the "best available deal", the CWU union has rejected the plans, arguing it "does not meet our aspiration of a wage in retirement pension scheme".