Royal Mail has reported flat revenues in the three months to 28 June as UK letter volumes continued to decline.
The trading update comes ahead of the final sell off of the government’s 15% stake in the 500-year old company.
Royal Mail said UK letter volumes declined by 5% in the quarter with revenue down 4%. But that was in line with forecasts.
UK parcel volumes were 3% higher and rose by 9% in Europe, with revenue up 2% and 8% respectively.
The company said its outlook for letter and parcel volumes remained “unchanged” from that issued when it published its annual results in May.
Royal Mail said it remained focused on driving costs at its UK business lower this year.
It added that, as in all previous years, its performance would be weighted to the second half of the year and would be dependant on its traditionally busy Christmas parcels delivery period.
Royal Mail’s European parcel deliveries service, GLS, performed better than expected, the group said, largely driven by strong growth in Italy and Germany.
But the company added it was monitoring how the market reacted to changes to German minimum wage legislation, and said it continued to believe GSL profit margins would be affected “by around 50 – 100 basis points” this year.
Royal Mail chief executive Moya Greene, warned the company’s trading environment remained “challenging”, adding Royal Mail was “stepping up the pace of change to drive growth, efficiency and innovation while maintaining a tight focus on costs”.
Last month, regulator Ofcom said the regulation of Royal Mail would be reviewed by Ofcom after the withdrawal of rival Whistl from the direct delivery letters market, which removed any national competition for direct delivery of letters.
Ofcom said the “fundamental” review would “ensure regulation remains appropriate and sufficient to secure the universal postal service”.
The government sold half of its remaining 30% stake in Royal Mail in June, raising £750m for the Exchequer.
In May, Royal Mail reported an increase in full-year profits to £740m, up 6% from a year earlier.