Royal Mail delivers Xmas present as parcels thrive

● Boss insists progress made with unions ● Praises staff for ‘pulling out all the stops’ in December

Royal Mail has said it handled 149 million parcels in a good Christmas performance for the group and confirmed it was edging closer to an agreement with unions over pay and pensions.

The FTSE 250 business said yesterday that it had seen a 6 per cent rise in the number of parcels handled year-on-year in December amid the continuing sharp growth of online shopping.

Overall Royal Mail revenues lifted 2 per cent in the first nine months of the group’s year, with the number of parcels handled up 6 per cent, while revenue at its European parcels business rising 10 per cent.

Letter deliveries remained under pressure, but City analysts said the nine-month fall of 5 per cent was less bad than feared.

Competition is getting tighter in the parcels market because of new entrants such as Amazon.

Royal Mail said it was making progress in talks with the Communication Workers Union (CWU) over pay and pensions after the union had threatened to strike before the key festive season.

Moya Greene, Royal Mail’s chief executive, commented: “We have had a good performance over the important Christmas period thanks to the hard work and dedication of our people. They pulled out all the stops.”

On talks with unions, she added: “We have agreed the fundamental principles on some of the key issues and talks are ongoing to finalise these and other areas.

“We believe we can reach agreement on an affordable and sustainable pension solution and a pay deal that will enable us to continue to innovate and grow.”

The organisation had warned last November that industrial action and efforts to reach a deal could knock its second-half performance.

But the group saw its parcels arm drive a solid third-quarter performance, with revenues for the division up 4 per cent in the nine months, helped by a new cross-border traffic initiative for international business.

Letter revenues fell 3 per cent in the nine months, but its European parcels business, General Logistics Systems (GLS), saw revenues jump 10 per cent over the nine months.

The group said it expects a broadly similar performance for the full year from parcels and letters, while GLS growth is likely to remain in line with the first half.

Nicholas Hyett, an anlyst with stockbroker Hargreaves Lansdown, said: “Royal Mail’s Christmas looks to have been pleasingly uneventful.”