Royal Mail’s overseas division was still driving business growth in Q1 of its financial year, as letter volumes continued to plummet.
For the three months ended 25 June, the first quarter of Royal Mail’s financial year, the group saw turnover growth of 1%.
Its UK letters and parcels division, UKPIL, suffered a 1% turnover drop, while its overseas GLS grew revenue by 6%.
Within UKPIL parcels volumes grew 5%, which the group said was driven by new contracts and growing traffic from existing customers.
Within that 5% growth is a 2% boost from Royal Mail’s new drive to attract cross-border traffic from Asia into Europe.
This sees it receive Europe-bound consignments into Heathrow from Asia, taking it through customs and on its way to the continent.
Declining letter volumes and turnover continued to offset growth in Royal Mail’s parcels division, with volume down 6% and a turnover loss of 4%.
This, said Royal Mail CEO Moya Greene, was “better than we expected, despite continued business uncertainty in the UK”.
The turnover would have been lower, but for higher than expected income from general election literature.
"Overall, we have had a good start to our financial year," said Greene. "Group revenue was up 1%, driven by another strong performance in GLS. This more than offset a 1% decline in UKPIL revenue.
Royal Mail's results for the year ended 26 March 2017 showed the operator was leaning on GLS for business growth, which a market analyst said was disappointing in the context of the parcels boom gripping the rest of the delivery sector.
"GLS continues to be a driving force for the Group. Its ongoing, focused international expansion is increasing our geographic diversification, scale and reach.”
