RMG.L Regulatory News (RMG)

Royal Mail plc

News Release

21 July 2015

ROYAL MAIL plc

TRADING UPDATE FOR THE THREE MONTHS ENDED

28 JUNE 2015

Royal Mail plc (RMG.L) today issued the following trading update covering the three months ended 28 June 2015. Overall, trading in the period was broadly in line with our expectations.

Moya Greene, Chief Executive Officer, Royal Mail plc, said:

"In the first three months of our financial year we have seen a continuation of the overall market trends we saw last year. We have benefitted from the parcel initiatives that took effect in the second half of last year and a good performance from GLS. Our trading environment remains challenging and we are stepping up the pace of change to drive efficiency, growth and innovation, while maintaining a tight focus on costs."

Trading performance for the three months ended 28 June 2015

· UKPIL revenue was down 2%, with parcel revenue up 2% but letter revenue down 4%.

· Parcel performance in part reflects a relatively weak comparative period last year.

· Parcel volumes were up 3%, supported by continued growth in low AUR import parcels and a 20% increase in Parcelforce Worldwide, our smaller express parcels unit. In account parcels, we benefitted from the initiatives that took effect in the second half of last year. We successfully targeted new sectors of the market and benefitted from opening our network later and at the weekend.

· Parcel revenue was up 2% due to the pricing environment which remains very competitive in all the major segments, in particular Parcelforce Worldwide and export parcels.

· Addressed letter volumes decreased by 5% (excluding the impact of election mailings), within our forecast range of a 4-6% decline per annum.

· Total letter revenue was down 4%. We benefitted from election mailings revenue in both this period and the same period last year. We have seen some evidence of downtrading as well as declines in the higher AUR products which have partially offset the impact of letter price increases which came into effect in January and March.

· GLS performed better than expected, largely driven by a continued good performance in Italy and a better performance in Germany.

· We are monitoring how the market is reacting to the change in German minimum wage legislation and continue to expect that GLS margins could be impacted by around 50-100 basis points this year.

Outlook

Our outlook for letter and parcel trends and other guidance remain unchanged from that set out in our Financial Report for the full year ended 29 March 2015 issued on 21 May 2015. In particular, we remain focused on costs and continue to target flat or better UKPIL underlying costs for 2015-16. As in previous years, our performance will be weighted to the second half and will be dependent on our important Christmas period.

The results for the half year ending 27 September 2015 are expected to be announced on Thursday 19 November 2015.

Note:

1. Movements in volume and revenue are on an underlying basis, unless otherwise stated. Underlying movements are calculated after adjusting for foreign exchange movements in GLS' revenue (excluding DPD SL) and working days in UKPIL revenue, as well as any non-recurring or distorting items that have impacted the reporting periods. For volumes, underlying movements are adjusted for working days in UKPIL. There was the same number of working days in the first three months of 2015-16 compared with the same period last year. For comparison purposes all underlying adjustments are made to the prior period.

Enquiries:

Investor Relations

Catherine Nash

Phone: 020 7449 8297

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.