Royal Mail reports strong Christmas

Prospects for Royal Mail, ​which was ​privatised in 2013, hinge on its ability to cut costs and modernise its operations to help win more of a parcels market buoyed by a boom in online​ ​shopping.

Royal Mail said it handled 130 million parcels in December alone, reflecting strong Christmas trading, which was up ​six​ per​ ​cent ​on​ the previous year.

​​Chief executive Moya Greene​ said: "Once again, our postmen and women delivered a great Christmas – even better than last year’s strong performance.

"We remain on track to deliver at least a one per cent reduction in underlying operating costs before transformation costs ... for the full year."

Royal Mail shares traded 1.5 per​ ​cent higher at 428​p ​this morning.

The company said quarterly group revenue​ rose ​one ​pe​r ​cent, compared ​with​ a flat outcome in the first half, and that overall trading for the nine months ​to December 27 was in line with its expectations.

Royal Mail said it had seen a strong performance in its European parcels arm GLS, with volumes up 11 per​ ​cent and revenues climbing to 10 per​ ​cent in the third quarter, on the back of strong demand from Poland and Italy.

It had previously warned of challenging market conditions for the business, but said the improvement meant it was not anticipating a decline in GLS margins for the full year.

Volumes in its letter business also held up relatively well against an anticipated slowdown in the market, down ​three​ per​ ​cent in the third quarter which was ahead of the company's projected range of ​a four to six​ per​ ​cent annual decline.