Royal Mail has revealed that its UK operation saw a 2% year-on-year decline in turnover in the first quarter of its financial year, just a day after reports that the company submitted an objection to an ongoing Ofcom investigation into its pricing regulations emerged.
While the revenue in UKPIL, Royal Mail’s post and parcel operation in the UK, was subject to decline, turnover at GLS, its international operation, saw an 8% rise.
Parcel revenue within the group saw a 2% year-on-year increase in the quarter, which Royal Mail said was boosted by a 20% turnover rise from Parcel Force Worldwide, its express parcels operation.
Overall parcel volume was up 3%. In May Royal Mail that over capacity in the parcels market was putting downward pressure on pricing.
Letter volumes were down 5%, with turnover for the unit down 4%.
Royal Mail said that this was in line with its prediction that letter volumes will decrease between 4% and 6%76 every year. In its report for the 2014/15 financial year, it said election activity in the letters sector had prevented the figure from falling further.
Royal Mail chief executive Moya Green said: “In the first three months of our financial year we have seen a continuation of the overall market trends we saw last year.
“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."
The trading update was released the day after Royal Mail had made an objection to Ofcom’s ongoing investigation into its pricing regulations, which was prompted by a complaint from rival Whistl last year.
A spokesman for Ofcom told Motortransport.co.uk: “Royal Mail has raised an issue with Ofcom’s Procedural Officer. This is currently being considered and a decision will be published in due course.”
Ofcom is conducting a separate “fundamental review” into the regulation affecting Royal Mail, after the demise of Whistl’s end-to-end operation removed its direct competition from the postal market.
Ofcom said the review “will ensure regulation remains appropriate and sufficient to secure the universal postal service” now that Royal Mail is no longer subject to national competition”.
