TIDMRMG
RNS Number : 5126M
Royal Mail PLC
21 January 2016
Royal Mail plc
News Release
21 January 2016
ROYAL MAIL plc
TRADING UPDATE FOR THE NINE MONTHS ENDED 27 DECEMBER 2015
Royal Mail plc (RMG.L) today issued a trading update covering
the nine months ended 27 December 2015. Overall, trading in the
period fully met our expectations.
Moya Greene, Chief Executive Officer, Royal Mail plc, said:
"Once again, our postmen and women delivered a great Christmas -
even better than last year's strong performance. This is because of
the commitment of our people and our investment in additional
temporary staff and sorting capacity. Extensive planning, which
began in the spring, ensured we had the capacity to accommodate
additional volumes from our retail customers and other delivery
operators.
"In the first nine months, UK parcel volumes were up 4%, with
130m parcels handled in December alone, 6% more than last year. The
performance in letters improved slightly over the first half, with
addressed letter volumes, excluding elections, down 3%. In Europe,
GLS performed better than expected with volumes up 11%. Given the
performance to date, we are not anticipating a decline in GLS
margins for the full year. We remain on track to deliver at least a
1% reduction in underlying operating costs before transformation
costs in UKPIL for the full year."
Trading performance for the nine months ended 27 December
2015
Group Change(1)
Revenue 1%
-- Group revenue reflects a good performance over our peak
period in UKPIL as well as a better than expected performance in
GLS.
UKPIL Change(1)
Revenue (1%)
-- UKPIL revenue was down 1%, with parcel revenue up 1% and letter revenue down 2%.
Parcels Change(1)
Volumes 4%
Revenue 1%
-- Trends in parcels in the first nine months were the same as those seen in the first half.
-- Parcel volume growth continued to be driven by Royal Mail
account parcels, which benefitted from recent new contract wins,
import parcels, and Parcelforce Worldwide, which saw volumes
increase by 16%. Growth in these channels has more than offset the
tough trading environment in consumer/SME and export parcels.
-- Parcel revenue was up 1% due to the impact of the competitive
environment and the trends in mix. We continue to see the impact of
higher volumes of lower AUR import parcels, largely from China, and
lower volumes of higher AUR consumer/SME and export parcels, due to
increased competition in these segments and a foreign
exchange-driven impact on the export/import mix.
Letters Change(1)
Addressed letter volumes (3%)
Revenue (2%)
-- Addressed letter volumes decreased by 3% (excluding the
impact of election mailings), reflecting the one-off benefit from
the return of direct delivery volumes and a good performance over
our peak period.
-- Total letter revenue was down 2% as the continuing change in
mix partially offset the impact of letter price increases.
GLS Change(1)
Volumes 11%
Revenue 10%
-- GLS performed better than expected, benefitting from a good
performance over the peak period. GLS Italy and GLS Poland
delivered particularly good performances in the first nine
months.
-- While profitability in GLS Germany continues to be impacted
by the German minimum wage legislation, overall profitability is
benefitting from good volume-related revenue growth in most of
GLS's markets.
Recent developments
We have made a number of investments to improve our
technological capabilities and enhance our offering in the parcels
space. In November, we agreed to acquire eCourier, a leading same
day parcel delivery company. In December, we acquired NetDespatch,
a leading software solution provider specialising in parcel data
management and labelling for retailers and parcel carriers.
On 15 December, we announced that we had received notification
of the fine from the French competition authority in relation to
antitrust law breaches by GLS France. The fine of EUR55.1m
(GBP40.2m) was fully provided for in our financial statements for
the year ended 29 March 2015.
Current trading and outlook
Overall, trading in the nine months ended 27 December 2015 fully
met our expectations, with a good performance over our peak period
in UKPIL as well as a better than expected performance in GLS. We
remain on track to deliver at least a 1% reduction in underlying
operating costs before transformation costs in UKPIL for the full
year. Given the performance to date, we are not anticipating a
decline in GLS margins for the full year(2) . Otherwise our outlook
for letter and parcel trends and other guidance remain unchanged
from that set out in our financial results for the half year ended
27 September 2015.
The results for the full year ending 27 March 2016 are expected
to be announced on Thursday 19 May 2016.
Notes:
1. Movements in revenue, costs and volume are on an underlying
basis, unless otherwise stated. Underlying change is calculated
after adjusting for working days in UKPIL revenue, foreign exchange
movements 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 exclude elections in letter
volumes. In 9M 2015-16 there were 227.5 working days in UKPIL (9M
2014-15 227.5). We estimate that the impact of working days in
UKPIL will be around GBP25m for the full year (2015-16 303; 2014-15
304). For comparison purposes all underlying adjustments are made
to the prior period.
2. For 2014-15 the reported margin for GLS (including discontinued operations) was 7.0%.
Enquiries
Investor Relations
Catherine Nash
Phone: 020 7449 8183
Email: investorrelations@royalmail.com
Media Relations
Mish Tullar
Phone: 07423 524 154
Email: mish.tullar@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
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