TIDMRMG
RNS Number : 6796M
Royal Mail PLC
23 September 2021
Royal Mail plc
(Incorporated in England and Wales)
Company Number: 8680755
LSE Share Code: RMG
ISIN: GB00BDVZYZ77
LEI: 213800TCZZU84G8Z2M70
23 September 2021
TRADING UPDATE
Given the unprecedented impact of the COVID-19 pandemic, for
FY2021-22 we committed to providing bi-monthly updates on volume
and revenue performance. Performance for the five months to August
and the two months of July and August combined is detailed
below.
Keith Williams, Chair, commented: "The first five months saw
continued revenue growth across the Group, with both Royal Mail and
GLS reporting higher revenues than the prior year."
"In Royal Mail, we are increasingly confident that domestic
parcels are re-basing at a significantly higher level than
pre-COVID and believe we are maintaining our share of the market.
Domestic parcel volumes are up around a third compared to
pre-COVID. Domestic parcels performance continues to be more robust
against ongoing challenges in international. Whilst we continue to
expect further normalisation of parcel performance as we unwind
from the pandemic and anticipate some upward pressure on costs,
both adjusted operating profit and margin are expected to be higher
in H2 compared to H1."
"GLS continues to deliver good volume and revenue growth, both
year on year and against 2019. Whilst we are seeing upward pressure
on costs in a number of our markets, we maintain our outlook for
the full year of low single digit % revenue growth and c. 8%
operating margin."
YEAR TO DATE PERFORMANCE- FIVE MONTHS TO AUGUST 2021
Group
-- Revenue: Grew by 8.2% year on year and by 17.7% compared to the same period in 2019;
Royal Mail
-- Revenue: Increased by 7.2% year on year and by 12.1% vs. the same period in 2019 ;
-- Domestic parcel revenue: Grew by 4.1% year on year and by 44.5% vs. the same period in 2019;
-- Domestic parcel volume: Decreased by 5% year on year, but
grew 34% vs. the same period in 2019;
-- Total parcel revenue: Grew by 0.1% year on year and by 33.3% vs. the same period in 2019;
-- Total parcel volumes: Decreased by 12% year on year but grew by 18% vs. same period in 2019;
-- Total letter revenue: Increased by 18.3% year on year and
declined by 7.3% vs. the same period in 2019.
-- Addressed letter volumes (excluding elections): Increased by
13% year on year and declined by 19% vs. the same period in 2019
;
GLS
-- Revenue: Increased 9.3% year on year and by 30.5% vs. the same period in 2019.
-- Volume: Increased by 9% year on year and by 30% vs. the same period in 2019.
YEAR TO DATE PERFORMANCE - FIVE MONTHS TO AUGUST 2021
August year to date(5) % change(4)
Volume (m) 2021 2020 2019 2021 vs. 2021 vs 2019
2020
-------- --------- -------------
Royal Mail
Total Parcels 616 698 520 (12)% 18%
-------- -------- ------- --------- -------------
Domestic
Parcels (ex. international)(3) 546 578 409 (5)% 34%
-------- -------- ------- --------- -------------
Addressed
Letters (ex. elections) 3,222 2,848 3,956 13% (19)%
-------- -------- ------- --------- -------------
GLS 347 318 267 9% 30%
-------- -------- ------- --------- -------------
August year to date(5) % change(4)
Revenue (GBPm) 2021 2020 2019 2021 vs. 2021 vs. 2019
2020
-------- --------- --------------
Group (2) 5,123 4,736 4,352 8.2% 17.7%
-------- -------- ------- --------- --------------
Royal Mail 3,464 3,231 3,092 7.2% 12.1%
-------- -------- ------- --------- --------------
Total Parcels 1,966 1,964 1,475 0.1% 33.3%
-------- -------- ------- --------- --------------
Domestic
Parcels (ex. international)(3) 1,624 1,560 1,124 4.1% 44.5%
-------- -------- ------- --------- --------------
Letters 1,499 1,267 1,617 18.3% (7.3)%
-------- -------- ------- --------- --------------
GLS 1,669 1,527 1,279 9.3% 30.5%
-------- -------- ------- --------- --------------
Royal Mail
Domestic parcel volumes increased by 34% compared to pre-COVID
levels (April to August 2019), broadly similar to the trend seen in
Q1. Reflecting the removal of lockdown restrictions during the
summer, domestic volumes decreased by 5% compared to the same
period last year, which included the first lockdown and closure of
non-essential retail.
Total parcel volume declined by 12% year on year in the five
months to August, a result of reduced volumes in international
which has been impacted by a number of factors previously outlined,
including increased customs processing and reduced air freight
capacity. Enhanced customs clearance capabilities, which come into
effect in the second half of the year, and a focus on driving
additional import volumes is targeted to support an improved
outlook for international in H2 vs H1.
Domestic parcel revenue grew by 44.5% compared to the five
months to August 2019, due to volume growth and positive price/mix.
Total parcel revenue grew by a third, reflecting our performance in
international, which we believe is in line with market changes.
Year on year domestic parcel revenue grew by 4.1%, with total
parcel revenue broadly flat.
Addressed letter volumes (excluding elections) were down 19%
compared to two years ago, reflecting the ongoing structural
decline in letters. Year on year volumes grew by 13%, given the
sharp declines seen at the start of the COVID-19 pandemic in 2020.
Total letter revenue grew by 18.3% year on year, reflecting volume
growth and positive price/mix.
We are working closely with the CWU on deployment of our
agreement and with the revisions activity progressing broadly to
plan. We anticipate this will be completed by the end of October.
From November, our focus will shift to securing the benefits, the
significant majority of which are targeted to be delivered in the
second half.
GLS
GLS delivered good volume and revenue growth, both year on year
and vs. 2019.
Volume growth slowed during the period as a result of lapping
strong volumes seen during the first COVID-19 lockdown in 2020 and
the easing of restrictions in a number of countries over the
summer. We continue to see the share of B2B increasing due to
recovering B2B volumes, combined with slowing B2C volume growth
compared to last year.
Revenue growth was 9.3% (13.6% growth in EUR) year on year and
30.5% (34.8% growth in EUR(1) ) compared to 2019. Reported revenue
growth was impacted by the strengthening of Sterling.
PERFORMANCE FOR THE TWO MONTHS OF JULY AND AUGUST COMBINED
July and August(5) % change(4)
Volume (m) 2021 2020 2019 2021 vs. 2020 2021 vs 2019
------- -------------- -------------
Royal Mail
Total Parcels 246 270 210 (9)% 17%
------- ------ ------ -------------- -------------
Domestic
Parcels (ex. International)(3) 220 226 167 (3)% 32%
------- ------ ------ -------------- -------------
Addressed
Letters (ex. Elections) 1,240 1,219 1,540 2% (20)%
------- ------ ------ -------------- -------------
GLS 131 122 106 7% 23%
------- ------ ------ -------------- -------------
July and August(5) % change(4)
Revenue (GBPm) 2021 2020 2019 2021 vs. 2021 vs. 2019
2020
------- --------- --------------
Group (2) 1,965 1,928 1,725 1.9% 13.9%
------- ------ ------ --------- --------------
Royal Mail 1,338 1,335 1,216 0.2% 10.1%
------- ------ ------ --------- --------------
Total Parcels 773 810 599 (4.6)% 29.0%
------- ------ ------ --------- --------------
Domestic
Parcels (ex. international)(3) 645 642 456 0.6% 41.6%
------- ------ ------ --------- --------------
Letters 565 525 616 7.7% (8.3)%
------- ------ ------ --------- --------------
GLS 630 603 519 4.5% 21.5%(1)
------- ------ ------ --------- --------------
Royal Mail
Due to seasonality July and August are typically lower volume
periods of the year. Domestic parcel volumes increased by 32% vs.
July and August 2019, but fell by 3% year on year, an improvement
on the 7% year on year decline seen in Q1.
Total parcel volumes in the two months of July and August
increased by 17% vs. the same months in 2019, but fell by 9% year
on year, again an improvement on Q1 this year.
Total parcel revenues grew by 29.0% vs. July and August 2019.
Year on year revenues decreased by 4.6%, primarily due to lower
volumes and changing product and channel mix, with volumes in
higher value export and consumer channels a smaller proportion of
total volume.
Addressed letter volumes (excluding elections) in July and
August were down 20% compared to two years ago. Year on year
volumes increased by 2%, with total letter revenue up 7.7%
reflecting positive price/mix.
Royal Mail revenue increased by 0.2% in July and August year on
year, and by 10.1% over two years.
GLS
Volume growth in July and August was 7% year on year, or 23%
compared to 2019.
Revenue growth was 4.5% (10.6% growth in EUR) year on year and
21.5% (29.2% growth in EUR(1) ) compared to July and August 2019.
Underlying revenue growth in Euro terms was driven by higher
volumes and better pricing. Reported revenue growth was impacted by
the strengthening of Sterling.
Outlook
The future evolution of the COVID-19 pandemic, including levels
of transmission, consumer behaviour and economic factors such as
GDP growth and inflation will influence future performance.
As previously stated, there is still significant short-term
uncertainty as we unwind from the impacts of the pandemic and we
continue to expect month-on-month fluctuations in parcel volumes
during 2021-22.
Group adjusted operating profit for the first half of 2021-22 is
expected to be GBP395 to GBP400 million, with at least GBP230
million from Royal Mail.
In Royal Mail, despite some anticipated upward pressure on
costs, both adjusted operating profit and margin are expected to be
higher in H2 compared to H1, due to the significant majority of the
benefits of our CWU agreement targeted to be delivered in H2, along
with our non-staff cost reduction programme. This is in line with
the more usual phasing of profit towards the second half, as in
previous years.
In GLS, whilst we also are seeing upward pressure on costs in a
number of our markets due to tighter labour markets and more
general inflationary pressures, we expect these can be absorbed
within our existing guidance for the full year and maintain our
outlook of low single digit % revenue growth and c. 8% operating
margin.
Royal Mail Group interim results for the 6 months to the end of
September 2021 will be published on 18 November 2021.
1. Growth vs. July and August 2019 includes the benefit of the
Mountain Valley Express acquisition which added c. 2 percentage
points to the 2 year growth rate.
2. Royal Mail and GLS revenue does not equal Group revenue due
to the elimination of intragroup trading.
3. Domestic Parcels excludes import and export for both Royal Mail and Parcelforce Worldwide
4. % changes based on reported numbers.
5. Note the UK August Bank Holiday fell in period 5 (August) in
19/20 and in P6 (September) in 20/21 and 21/22
Enquiries:
Investor Relations
John Crosse
Email: investorrelations@royalmail.com
Royal Mail investor relations line: 020 7449 8183
Media Relations
Helen Reynoldson
Phone: 07483 302 245
Email: helen.reynoldson@royalmail.com
Jenny Hall
Phone: 07776 993 036
Email: jenny.hall@royalmail.com
Royal Mail press office: press.office@royalmail.com
Company Secretary
Mark Amsden
Email: cosec@royalmail.com
FORWARD-LOOKING STATEMENTS
This document contains certain forward-looking statements
concerning the Group's business, financial condition, results of
operations and certain Group's plans, objectives, assumptions,
projections, expectations or beliefs with respect to these items.
Forward-looking statements are sometimes, but not always,
identified by their use of a date in the future or such words as
'anticipates', 'aims', 'due', 'could', 'may', 'will', 'would',
'should', 'expects', 'believes', 'intends', 'plans', 'potential',
'targets', 'goal', 'forecasts' or 'estimates' or similar
expressions or negatives thereof.
Forward-looking statements involve known and unknown risks,
uncertainties and other factors, which may cause the Group's actual
financial condition, performance and results to differ materially
from the plans, goals, objectives and expectations set out in the
forward-looking statements included in this document.
All written or verbal forward-looking statements, made in this
document or made subsequently, which are attributable to the Group
or any persons acting on its behalf are expressly qualified in
their entirety by the factors referred to above. Accordingly,
readers are cautioned not to place undue reliance on
forward-looking statements. No assurance can be given that the
forward-looking statements in this document will be realised;
actual events or results may differ materially as a result of risks
and uncertainties facing the Group. Subject to compliance with
applicable law and regulation, the Group does not intend to update
the forward-looking statements in this document to reflect events
or circumstances after the date of this document, and does not
undertake any obligation to do so.
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September 23, 2021 02:00 ET (06:00 GMT)
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