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You can find the current article at its original source at https://www.theguardian.com/business/2016/nov/17/royal-mail-profits-junk-mail-brexit-letters
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| Royal Mail profits fall as businesses send less junk mail | Royal Mail profits fall as businesses send less junk mail |
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| Uncertainty around Brexit has led to a dip in the amount of junk mail companies send, helping to push down profits for Royal Mail. | Uncertainty around Brexit has led to a dip in the amount of junk mail companies send, helping to push down profits for Royal Mail. |
| The company said its revenue from marketing mail fell by 8% in the six months to 25 September as businesses reined in their spending on advertising due to uncertainty about the outcome of the EU referendum and what form Brexit will take. | The company said its revenue from marketing mail fell by 8% in the six months to 25 September as businesses reined in their spending on advertising due to uncertainty about the outcome of the EU referendum and what form Brexit will take. |
| This decline was part of broader 4% fall in letter volumes for Royal Mail, although parcel volumes rose 2%. | This decline was part of broader 4% fall in letter volumes for Royal Mail, although parcel volumes rose 2%. |
| Royal Mail reported a 1% rise in revenue to £4.6bn during the period, but pre-tax profits fell from £116m to £110m. Shares in Royal Mail fell more than 6% after the half-year results were published, as analysts expressed concern at the continuing decline in letters. | Royal Mail reported a 1% rise in revenue to £4.6bn during the period, but pre-tax profits fell from £116m to £110m. Shares in Royal Mail fell more than 6% after the half-year results were published, as analysts expressed concern at the continuing decline in letters. |
| Moya Greene, chief executive, said the performance was “broadly in line with our expectations” and the drop in letter volumes was within the company’s forecast. | |
| Greene also revealed that Royal Mail is increasing the amount of costs it intends to cut by 2018 from £500m to £600m. | |
| The company is now preparing for the vital festive season, when the surge in online shopping orders and sending of Christmas cards leads to its busiest period of the year. | The company is now preparing for the vital festive season, when the surge in online shopping orders and sending of Christmas cards leads to its busiest period of the year. |
| “As always, our performance for the full year will be dependent on the important Christmas period,” Greene said. “Extensive planning, which began in the spring, will help us to manage our busiest time. This includes the recruitment of over 19,000 temporary staff and opening nine temporary parcel sort centres.” | |
| Nicholas Hyett, analyst at Hargreaves Lansdown, said the declines in the letter business were “painful”. He said: “The 5% fall in underlying profits at Royal Mail is largely the result of continuing weakness in the letters business. True, the decline is in line with company expectations but it’s still painful. Fortunately the European business is delivering a strong performance, boosted by currency movements, and continues to pick up the slack.” | Nicholas Hyett, analyst at Hargreaves Lansdown, said the declines in the letter business were “painful”. He said: “The 5% fall in underlying profits at Royal Mail is largely the result of continuing weakness in the letters business. True, the decline is in line with company expectations but it’s still painful. Fortunately the European business is delivering a strong performance, boosted by currency movements, and continues to pick up the slack.” |
| UK Mail reported a 0.4% drop in daily mail volumes, far smaller than that of Royal Mail. However, it suffered a 2.1% drop in average daily parcel volumes, which it blamed on strong growth in the same period last year after taking on customers from City Link, which collapsed in 2015. | UK Mail reported a 0.4% drop in daily mail volumes, far smaller than that of Royal Mail. However, it suffered a 2.1% drop in average daily parcel volumes, which it blamed on strong growth in the same period last year after taking on customers from City Link, which collapsed in 2015. |
| Overall UK Mail, which recently agreed a £243m takeover offer from Deutsche Post, suffered a 3.2% drop in revenues to £230m in the six months to the end of September, but pre-tax profits rose 17% to £5.8m. | Overall UK Mail, which recently agreed a £243m takeover offer from Deutsche Post, suffered a 3.2% drop in revenues to £230m in the six months to the end of September, but pre-tax profits rose 17% to £5.8m. |
| Peter Kane, the chairman, said: “Today’s results are further evidence of the good strategic progress we have made in recent years. Our operations are consistently delivering strong service levels while our new automated hub continues to perform very well and is starting to achieve the targeted efficiency levels.” | Peter Kane, the chairman, said: “Today’s results are further evidence of the good strategic progress we have made in recent years. Our operations are consistently delivering strong service levels while our new automated hub continues to perform very well and is starting to achieve the targeted efficiency levels.” |