Royal Mail suffers as data rules rein in junk
ROYAL MAIL’S letter deliveries have taken another hit because new data protection laws have made companies wary of sending out junk mail.
The FTSE 100 firm said letter volumes fell by 6 per cent in the three months to June 24 compared with the same period last year, a faster decline than the 5 per cent drop in the past financial year. Letter revenue was down 7 per cent. It admitted some business customers were “uncertain about the application” of the General Data Protection Regulation which came into force in May to protect European citizens from the misuse of their personal data.
It added: “We are monitoring any potential impact closely. We continue to work with customers to find solutions for their marketing mail needs.”
Royal Mail expects letter deliveries to be at the higher end of its 4-6 per cent range of decline this year but also warned it “may fall outside the range”.
Overall, UK sales fell by 1 per cent after parcel revenue increased by 6 per cent on 7 per cent higher volumes, boosted by online shopping.
GLS, its European parcels business, was the star performer, increasing volumes and revenue by 10 per cent and 11 per cent respectively after strong growth in Italy, Denmark and Spain. This lifted group revenue by 2 per cent. New chief executive Rico Back said overall trading was in line with expectations and he expects a “good performance” this year from GLS despite a potential squeeze on profit margins from higher wage costs.
A payout of nearly £6million to buy him out of his contract as boss of GLS could spark a revolt by investors at tomorrow’s annual meeting.
He is also being paid £100,000 more in salary than departing boss Moya Greene. Nicholas Hyett, analyst at Hargreaves Lansdown, said: “The letters business isn’t being helped by GDPR which is making marketers nervous.
“The new CEO may be one of the few people hoping the current political turmoil spills over into a general election – election mailings provide Royal Mail with a useful boost and 2018 looks like it could be the first year since 2013 without a major vote in the UK.”