Royal Mail has delivered yet more gloom over full-year profits and warned of a worse-than-expected fall in addressed letter mailings, as business uncertainty takes its toll.
The group, which sent shares plummeting last October after alerting over profits, said addressed letter mailings tumbled 8% over the nine months to December 23 despite its busy Christmas period.
It said letter volumes are set to fall by 7% to 8% over the full year and will be worse than forecast for 2019-20, with Brexit impacting business confidence adding to the ongoing trend for “e-substitution”.
The group also trimmed the top end of its forecasts for annual earnings to between £500 million and £530 million against the previous forecast of £500 million to £550 million.
This marks a hefty fall on the £694 million reported last year.
Shares fell as much as 20% last October when Royal Mail first revealed the extent of the expected profits fall.
In its nine-month trading update, Royal Mail reported an overall 2% rise in underlying revenues as an 8% rise in sales at its General Logistics Systems (GLS) division offset a 1% fall in its UK parcels and letters arm.
Rico Back, group chief executive of Royal Mail, said: “Due to our letters performance to date, we expect addressed letter volume declines, excluding elections, to be in the range of 7% to 8% for 2018-19.
“While the rate of e-substitution remains in line with our expectations, business uncertainty is impacting letter volumes.
“As a result, addressed letter volume declines, excluding elections, are likely to be outside our forecast medium-term range next year.”
But otherwise he said the group enjoyed a “busy Christmas season”, handling 164 million parcels in December alone, up 10% compared with last year.