Royal Mail: strong growth – uncertainty about coming months

Royal Mail has seen strong revenue and volume growth in the financial quarter ended June 2021 but is cautious about the coming months as pandemic restrictions are lifted and the market faces change as shoppers have the opportunity to return to their old habits.

Royal Mail Group saw revenue grew by 12.5% over that of Q1 2020-21. Keith Williams, Chair, commented: “The first quarter saw a strong revenue performance across the Group, with both Royal Mail and GLS reporting higher revenues than the prior year.”

Royal Mail (domestic mail and parcels) revenue in the first quarter increased by 12.2% year on year, and 13.4% over two years. Williams continued, “For Royal Mail, as expected, parcel volumes decreased and letter volumes increased compared to the exceptional period last year encompassing the UK’s first lockdown, when non-essential retailers closed for the first time. We are starting to see evidence that the domestic parcel market is re-basing to a higher level than pre-pandemic, as consumers continue to shop online.”

GLS revenue growth of 12.4% and also benefitted from improved prices and higher freight revenues “For GLS, as expected, parcel volume growth continued albeit at a slower rate, due to the exceptionally strong comparators from the same period in 2020-21,” commented Williams.

Williams concluded, “As pandemic restrictions continue to ease there is still uncertainty about levels of COVID transmission, the impact on consumer behaviour and economic factors such as GDP growth and inflation, all of which will impact on future performance. We continue to expect fluctuations in volumes as we emerge from COVID restrictions, which we will need to manage accordingly. Nonetheless we are encouraged by the revenue performance across Royal Mail and GLS in the first quarter, and notwithstanding the current uncertainty, remain confident about the full year.”