Royal Mail reports revenue rise as parcel delivery offsets letter slowdown

The company reiterated its full-year guidance and said that it continues 'to monitor the impact of overall business uncertainty in the UK on letter volumes'

Royal Mail has in recent months been embroiled in a pension dispute (PA)

Royal Mail reported a 1 per cent rise in first quarter revenue on Tuesday, as a robust performance in its European parcel delivery business helped to offset more lacklustre figures out of the UK.

The company reported a 1 per cent fall in is combined UK parcel and letter division. Fewer people sent letters, but the soaring popularity of e-commerce helped offset that to a large extent.

“The company is at the mercy of the shifting trends in letters and parcels,” said Neil Wilson, a senior market analyst at ETX Capital. “People are sending fewer letters to each other but online shopping means far more parcels are being sent – the Amazon effect, which is proving so destructive for high street retailers, is at least supporting Royal Mail,” he added.

The company reiterated its full-year guidance and said that it continues “to monitor the impact of overall business uncertainty in the UK on letter volumes”.

Royal Mail has in recent months been embroiled in a pension dispute. It’s one of the few major UK companies that still offers a defined-benefit plan but wants to replace this with a modified defined benefit plan, or contribution pension scheme, which it says will dramatically slash costs.

On 14 July the main trade union for Royal Mail, the Communications Workers Union, rejected a new pension arrangement, raising the possibility of a strike. The CWU said that the proposed move would result in employees in the plan losing on average up to a third of their future pensions.

"It does not meet our aspiration of a wage in retirement pension scheme, but rather still promotes the conventional wisdom of a cash-out arrangement at the point of retirement," CWU deputy general secretary of postal, Terry Pullinger, said at the time.

"It would still represent a significant shortfall in the pensions promise and it is not something that we are prepared to recommend to our members.”

On Tuesday Royal Mail said that it continues to discuss future pension arrangements with the CWU.

Unite, the country’s largest union, said on 14 June that it would be holding a consultative ballot of its 6,000 Royal Mail managers on the pension proposals put forward by the company.

The union said that it would be making no recommendation to its members on the package. The balloting started this week and will close on 7 August.

“We think it is important that Unite members have an opportunity to express an opinion on what is being put forward by the company,” Unite officer for the Royal Mail Brian Scott said at the time.

Shares in Royal Mail ended the day just over 3 per cent higher.

Additional reporting by newswires