Royal Mail (RMG.L) received a boost from investors on Thursday after it revealed it delivered record parcel numbers during the festive period and updated its guidance for the year.
It was the company’s busiest quarter in its history as a surge in online shopping, boosted by the coronavirus pandemic, drove sales growth.
The delivery firm handled 496 million parcels in the three month period to the end of December, including 11.7 million in a single day at its peak - a third more than the busiest day during the first national lockdown in 2020.
Its parcels division saw volumes grow 31% and revenue climb 37%.
Royal Mail said that revenues for the year ending in March is not expected to be “significantly beyond” the top-end estimates it issues in November. It also warned of an impact on service quality as a result of huge workloads, as well as increased absence rates due to the pandemic.
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Shares were as much as 6% higher on the back of the news, their best levels since September 2018.
Non-executive chair Keith Williams said: “Given the stronger than anticipated trading, primarily driven by further COVID-19 restrictions and improved letter volumes, we now expect group adjusted operating profit to be well in excess of £500 million for financial year 2020-21.”
He also apologised for delivery delays over Christmas and the New Year, blaming social-distancing requirements in sorting offices and staff absences due to mandatory self-isolation in some areas including parts of London, Daventry, Barnsley, Leeds and Margate.
“We recognise that at times our service during the period was not always as we would have wished. But thanks to the efforts of our team, the retention of around 10,000 of the 33,000 flexible workers from the Christmas peak, and the introduction of new processes, we have been making encouraging progress.
“We are resolutely focused on delivering a comprehensive service despite the challenging circumstances.”
Royal Mail also admitted that the impact of the UK’s new trading relationship with the EU, since leaving the transition period, has been “limited”, although there had been a reduction in international volumes.
Last month, Royal Mail reached a landmark deal with the Communication Workers Union (CWU) to end a two-year dispute on job security, pay and hours for its workers.
Executives said the agreement allows the company to introduce change more quickly, such as a round-the-clock operation for parcels and new technology.
Last year the group also revealed that it plans to start picking up parcels from people’s homes as it aims to capitalise on the online shopping boom.
It aims to charge 72p per parcel collection while pre-paid return packages will be charged at 60p per item. It will collect up to five parcels per address.
The new Parcel Collect service, which will rival the likes of DHL, Hermes and DPD, has so far been trialled in the west of England and will be available every every except Sunday. Customers will have to pay for the service online or by using the Royal Mail app.
Royal Mail said it was "one of the biggest changes to the daily delivery since the launch of the post box in 1852".
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