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| Version 1 | Version 2 |
|---|---|
| Royal Mail sees parcels revenue fall | Royal Mail sees parcels revenue fall |
| (about 1 hour later) | |
| Royal Mail has warned that price changes and competition from rivals have hit its parcels business. | Royal Mail has warned that price changes and competition from rivals have hit its parcels business. |
| Parcels revenue fell 1% in the three months to 29 June from a year earlier, and Royal Mail said parcels revenue for the year was likely to miss forecasts. | |
| However, the company said it was still likely to meet expectations for its overall annual performance. | However, the company said it was still likely to meet expectations for its overall annual performance. |
| Royal Mail's share price dropped sharply in early trading, before staging a recovery. | |
| Its shares fell 4% at first, but then regained some ground to stand 1.5% down on the day at 459.20p. | |
| Royal Mail's share price has received a great deal of scrutiny since the organisation was privatised in October last year. | |
| Royal Mail shares were offered at 330p on the first day of trading, but quickly jumped in value and reached a high of 615p in January. | |
| Earlier this month a group of MPs voiced concerns that the taxpayer may have lost out by around £1bn after Royal Mail shares were "undervalued". | |
| 'Honeymoon' over | |
| Royal Mail said on Tuesday that it expected revenues from its letters business and "cost controls" to offset the lower parcels revenue. | |
| However, Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said that the "honeymoon period" for Royal Mail's privatisation appeared to be over. | |
| "The weakness in the parcels performance is a concern, and may prompt questions as to whether this is transient, or whether the change is structural," he said. | |
| Although the decline in the parcels revenue was offset by an improvement in the Royal Mail's letters business, letters are not a long-term area of growth for the firm, Mr Hunter said. | |
| In addition, cost cutting measures "may help in the shorter term," but are also a "temporary relief", he said. | |
| Reorganisation | Reorganisation |
| The firm's parcels business is seen as a key growth area by the company. | |
| Royal Mail said it was facing "increasing challenges" in the UK parcels market, including competition from carriers "aggressively reducing prices". | Royal Mail said it was facing "increasing challenges" in the UK parcels market, including competition from carriers "aggressively reducing prices". |
| Changes to Amazon's minimum order level for free delivery, together with the expansion of the online shopping giant's delivery network, also had an impact on revenues, Royal Mail said. | Changes to Amazon's minimum order level for free delivery, together with the expansion of the online shopping giant's delivery network, also had an impact on revenues, Royal Mail said. |
| The firm's parcels export business was hit by competition and a strong pound, Royal Mail added. | The firm's parcels export business was hit by competition and a strong pound, Royal Mail added. |
| Despite lower parcels revenues, Royal Mail said it expected to meet its yearly targets. | Despite lower parcels revenues, Royal Mail said it expected to meet its yearly targets. |
| It said that although letter volumes decreased by 3% in the latest quarter, its letters revenue was up by 3% due to increases in stamp prices and letters "traffic" during the elections. | |
| The firm also expects to make £25m in savings through a "management reorganisation programme" announced in March. | The firm also expects to make £25m in savings through a "management reorganisation programme" announced in March. |
| Royal Mail added that it had submitted evidence to regulator Ofcom setting out its concerns about the "threat to the universal postal service" caused by "unfettered cherry-picking of high density urban areas" for direct delivery competition. | Royal Mail added that it had submitted evidence to regulator Ofcom setting out its concerns about the "threat to the universal postal service" caused by "unfettered cherry-picking of high density urban areas" for direct delivery competition. |