Royal Mail endures post-Brexit vote drop in junk mail volumes

Royal Mail (LSE: RMG.L - news) has blamed "business uncertainty" for a collapse in UK letter revenues, with shares falling 5% on opening to their lowest level for a year.

The FTSE 100 group said that while parcel volumes continued to rise over its crucial festive season, it continued to witness a drop-off in what many people would term as 'junk' mail and wider business activity.

The company said in its third quarter trading update: "We are seeing the impact of overall business uncertainty in
the UK on letter volumes, in particular advertising and business letters."

It had previously warned on the issue in its last update to the City, when revenues from advertising mail slumped 8% and profits were 15% lower.

The company, which announced then that it was targeting further cost savings, said on Thursday that the trend for letter volumes had continued.

Royal Mail reported that the number of addressed letters tumbled 6% in the nine months to 25 December, while letter revenues fell 5%.

This performance was partially offset by a 3% rise in parcel revenues in the same period - with deliveries up by 2%.

It meant though that overall group revenues were flat on the previous nine months - with a 2% fall in group revenue in the core UK business being offset by strong growth in its European parcels business, GLS.

Moya Greene, chief executive of Royal Mail, said: "Our postmen and women delivered a great service at Christmas, even better than last year, with 138 million parcels handled in December alone.

"Our comprehensive planning, which started much earlier this year, enabled us to deliver this service for our customers right across the UK."