Energy price hikes boosts Royal Mail’s letters business
25 Jan 2014
The delivery of the news of energy price hikes by the UK's power utilities helped to slow the decline of Royal Mail in its letters business, as the notification reached almost every household in the UK by post.
All six major power firms raised bills at the end of last year. In addition to a deal with British Gas to sort its mail, Royal Mail also delivered leaflets on behalf of a number of power suppliers.
The number of letters delivered was down by 5 per cent in the nine months to December, as against 6 per cent during the six months to September, while nine month revenues were down 3 per cent.
However, the company's shares declined 2 per cent after it said that its parcels business – the group's golden goose making up half its sales – was flat during the nine months.
Even as online shopping boomed, with many retailers saying the internet had become an ever-growing part of their business, the number of parcels delivered remained mostly unchanged.
The rise of 'click and collect' – where customers ordered online but picked up in stores – had offset the growth in online business.
However, Royal Mail lost out to rivals following threats of strikes putting off businesses from using its delivery services.
An 8-per cent increase in revenues from parcels did nothing to inspire confidence of analysts.
According to Royal Mail, it delivered the equivalent of 417,000 parcels every hour on 18 December, the busiest day in the run up to Christmas and 115 million parcels in December.
According to the company, it was still the biggest carrier in the UK having delivered ''significantly more'' than its competitors.
The Telegraph quoted Moya Greene, chief executive, as saying Royal Mail was delighted to see that people continued to send seasonal good wishes, with Christmas cards underpinning a like-for-like increase in its December stamped mail volumes.
However over nine months, Royal Mail posted a 3-per cent drop in letter revenues from a 5 per cent fall in volumes. Meanwhile, GLS, the European business, continued to grow, with revenues up 6 per cent on the back of a 5 per cent increase in volumes.
According to Greene, the division was ''exploiting the growth opportunities in the eurozone''. She added that overall Royal Mail's performance was in line with expectations and ''gives us confidence'' of meeting the next targets.
