The owner of Royal Mail said it remains on track to return to annual profit after a parcel boost over Christmas as its £3.6 billion takeover by Czech billionaire Daniel Kretinsky nears completion.
International Distribution Services (IDS) said Royal Mail delivered more than 99% of items that were posted on or before the recommended cut off date in time for Christmas.
It saw revenues lift 2.4% across Royal Mail in the three months to the end of December, with sales of parcels up 3.2% and a 1.4% rise for letters.
The group said addressed letters continued to fall by volume, down 7%, but that this was offset by stamp price rises.
Parcel sales across the UK by volume remained unchanged, at 334 million, but revenues rose 2.5% to £1.02 billion as prices rose, while the division was boosted by a better performance internationally, where revenues jumped 6.6% to £227 million.
The performance has kept the group on course to return to adjusted operating profit, before voluntary redundancy costs, in 2024-25 this fiscal year, “despite the difficult market environment”, IDS said.
The figures come as the takeover of IDS by Mr Kretinsky’s EP Group is expected to finalise by the end of the first quarter, having been cleared by the Government last month.
IDS confirmed on Tuesday that the deal had received clearance by European and American regulators.
Martin Seidenberg, chief executive of IDS, said: “At Royal Mail, we have made more progress to adapt to customer demand.
“Successful execution of our union agreements is bringing increased operational flexibility, which together with increased automation, and thousands of new vehicles, is leading to improved reliability.”
He added: “Whilst the market backdrop remains difficult, we are focused on strategic delivery and mitigation of inflationary pressures.”
The group warned in November that it was facing a £120 million hit from the incoming national insurance tax hike and that it could not rule out job cuts or price hikes to offset the blow.
Its latest update showed that total group revenue rose 0.8% to £3.6 billion as Royal Mail outperformed its international parcel arm GLS, where revenues fell 2% but rose 2.5% with acquisitions and disposals stripped out.
Royal Mail cheered a strong performance from its UK tracked parcel offering, with packages by volume up 19% to 188 million.
Its new “state-of-the-art” parcel hubs in Daventry and Warrington processed more than 75 million parcels during the Christmas period, up 23% year-on-year, according to IDS.