Royal Mail delivers the goods at Christmas but revenue falls flat

Royal Mail enjoyed a Christmas to remember, but it did not prevent revenue from falling flat in the three quarters through the festive period.

The FTSE 100-listed company said that in the nine months to 25 December, total revenue fell flat year-on-year, while revenue from the group's UKPIL division was 2% lower than in the corresponding period last year.

However, both figures were in line with expectations and the latter was offset by a 9% year-on-year increase in revenue in Royal Mail's GLS business.

In November, the company said uncertainty leading up to and after the European Union referendum led to a reduction in overall UK marketing activity and, on Thursday (19 January), it added the impact of overall business uncertainty in the UK on letter volumes was being felt.

The GLS division, which recorded an 8% increase in volume, benefitted from the timing of Easter and other public holidays across Europe, which accounted for around one percentage point of the volume and revenue movements.

UK parcel revenue was up 3% with volumes up 2%, while total letter revenue fell 5% with addressed letter volumes declining by 6%.

The traditionally busy Christmas period contributed to the 2% increase in volume, which was largely driven by Royal Mail account parcels. The postal operator handled 138 million parcels across December alone, adding it reaped the dividends of planning ahead of the festive period.

Meanwhile, volumes in the Parcelforce Worldwide segment declined by 1%, reflecting the very strong prior period and the increasingly competitive express parcels market.

Royal Mail added its outlook remained unchanged and it did not forecast to invest more than £500m over the next two years.

"Our cost avoidance programme is on track," said group chief executive Moya Greene. "We continue to target a reduction of up to 1% in underlying UKPIL operating costs before transformation costs in 2016-17."