Royal Mail PLC (LON:RMG) said trading conditions in the UK were challenging and that its letters volumes had fallen sharply, sending its shares plummeting.
The postal group said on Monday that its letter volumes, especially marketing mail, had been impacted by ongoing structural decline, business uncertainty and General Data Protection Regulations (GDPR).
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“In the UK, letter volumes are being impacted by ongoing structural declines, business uncertainty and GDPR, such that addressed letter volume is down 7% in H1 2018/19,” the company said in a statement.
“We anticipate a similar decline for the full year. Our medium-term outlook for addressed letter volume declines of between 4-6% per annum (excluding political parties' election mailings) is unchanged,” it added.
The company also said that its UK productivity performance had been “significantly below plan” at 0.1% during the first half and that it expects the full year performance to be significantly below target – at the upper end of its 2 to 3% range.
As a result, it now sees its 2018/19 cost avoidance target lowered from £230mln to £100mln and is implementing a range of short-term cost actions. Given these factors, the company expects group adjusted operating profit before transformation costs to be in the range of £500mln to £550mln on a 52 week basis.
On a more positive note, it said that its UK parcels business was performing well. UK parcel revenue and volumes were up 6% during the period. Revenue and volume growth for 2018/19 is now expected to be better than the prior year, it said.
Shares in Royal Mail were 18.3% down at 390.0p in late afternoon trade.