24 January 2014
ROYAL MAIL plc
INTERIM MANAGEMENT STATEMENT
Royal Mail plc (RMG.L) today issued the following Interim Management Statement covering the financial position and trading performance of the Group for the nine months ended 29 December 2013 and including the period from 30 September 2013 to date.
Moya Greene, Chief Executive Officer, Royal Mail plc, said:
"Our postmen and women have again delivered Christmas for the UK. We were delighted to see that people continue to send seasonal good wishes, with Christmas cards underpinning a like-for-like increase in our December stamped mail volumes. We remained the nation's number one parcel delivery company, handling 115 million parcels in the month of December alone. That's significantly more than any other carrier in the UK parcel market. GLS, our ground-based European parcels business, has performed well and is exploiting the growth opportunities in the Eurozone. Our financial performance to date is in line with our expectations and gives us confidence that we will deliver against our key value drivers for the full year."
Trading performance for the nine months ended 29 December 2013
· Like-for-like revenue up 2%
· Parcels accounted for 51% of revenue
· Like-for-like revenue up 1%
· Cost trends consistent with underlying performance in the first half
UK Parcels Like-for-like
· As expected, our size-based pricing approach has driven significant growth in revenue, with parcel revenue up 8% on a like-for-like basis in the nine months
· Parcels accounted for 41% of UKPIL revenue, compared with 38% in the nine months last year
· As anticipated, parcel volumes were flat. We saw good growth in account parcel volumes, despite some customer reaction to possible industrial action, and Parcelforce Worldwide grew strongly. However, there were declines in consumer volumes, including large uneconomic items that exited the core network following the introduction of size-based pricing
· Parcel volumes in the month of December were 115 million, a like-for-like increase, peaking at over 10 million parcels delivered on the busiest day. We handled significantly more parcels than any other carrier in the UK parcel market
UK Letters Like-for-like
Addressed letter volumes (5%)
· Total letter revenue declined by 3% on a like-for-like basis, compared with a 4% like-for-like decline in the first half, as the year-on-year impact of the London 2012 philatelic sales in the prior year has diminished
· Addressed letter volumes declined by 5% on a like-for-like basis, compared with a 6% like-for-like decline in the first half, in line with our expected range of a 4%-6% decline. The improvement in the decline in addressed letter volumes was partly due to high levels of mailings from energy companies at the beginning of the second half. There was also a like-for-like increase in stamped mail volumes in December which included the impact of Christmas cards
· GLS performed well continuing the trends seen in the first half, with good progress in Italy and the emerging European markets and the turnaround in France continuing. However sub-contractor rates in Germany continue to see upward pressure
Current trading and outlook
Overall, our trading and trends in the nine months ended 29 December 2013 and in the period from 30 September 2013 to date have been in line with our expectations and the first half. As a result, we expect these trends, including the revenue and volume trends in UK parcels, to continue and have confidence that we will deliver results consistent with our key value drivers for the full year.
On 9 December 2013 we announced we had reached agreement in principle with the CWU on an agenda for growth, industrial stability and protections, including a three-year pay offer, and confirming the Pensions Reform. The ballot to recommend the pay agreement and confirming the Pensions Reform commenced on 22 January 2014 and runs until 5 February 2014.
No material events or transactions impacting the Group's financial position have taken place during the period from 30 September 2013 to date save as disclosed in the Interim Financial Report for the half year ended 29 September issued on 27 November 2013.
The results for the full year ending 30 March 2014 are expected to be announced on Thursday 22 May 2014.
1) Like-for-like means adjusted for working days in UKPIL and for foreign exchange movements in
GLS. There were approximately the same number of working days in the nine months ended 29 December 2013 as there were in the same period last year
2) To date means up to 23 January 2014, being the latest practicable date prior to the publication of
this Interim Management Statement
3) The value drivers for the Group are as set out in Part VII paragraph 5 of the Royal Mail plc Prospectus dated 27 September 2013
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Figures presented in this Interim Management Statement are not audited. This Interim Management Statement 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 and 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.