Royal Mail sees ongoing uncertainty over new personal data rules
The figures come ahead of what is expected to be a fraught meeting with shareholders amid anger over pay awards made to new boss Rico Back.
Royal Mail has said firms remain uncertain over the recent shake-up of personal data rules as it continued to see a buoyant parcels business offset by falling letter deliveries.
The group reported a 7% fall in letter revenues in the three months to June 24, while UK parcel revenues rose 6%.
It said this left revenues in the UK division down 1%, while overall group underlying revenues lifted 2% thanks to an 11% surge in turnover at its European parcels business, General Logistics Systems (GLS).
Royal Mail reiterated its warning that it could see a steeper-than-expected drop in letter mailings due to the new General Data Protection Regulation (GDPR) changes and added that it is “monitoring any potential impact closely”.
The first quarter figures come just days ahead of what is expected to be a fraught meeting with shareholders.
Royal Mail is preparing for a showdown with investors at its annual general meeting (AGM) amid anger over a near-£6 million “golden hello” for new boss Rico Back.
Mr Back – the former boss of GLS who took over from Moya Greene as group chief executive last month – was awarded the hefty sum to buy out his contract at GLS in order to replace it with a new one ahead of his appointment as chief executive.
A number of shareholder advisory services groups have urged investors to vote against Royal Mail’s executive pay plans at the AGM on Thursday.
Mr Back is being paid a £640,000 annual salary, which is £100,000 more than his predecessor.
On the first quarter trading performance, Mr Back said: “Our performance in UK letters and parcels was as anticipated and GLS continued to perform strongly.”
He added that the group was “making progress” on changes over pensions and pay plans for its workforce.
A spokesman defended Mr Back’s pay package, saying his overall fixed pay – including base salary, pension entitlements and benefits – is “broadly” the same as Ms Greene’s.
He said: “Rico Back’s annual salary is higher than Moya Greene’s to compensate for the halving of the cash pension allowance he would have received were this the same as the pension allowance Moya Greene received.
“It is worth noting that the potential increase in Rico Back’s variable pay is subject to meeting stringent performance conditions.”
Shares in Royal Mail lifted 3% after its update.
Nicholas Hyett, an equity analyst at Hargreaves Lansdown, said: “Royal Mail’s new CEO, Rico Back, may be one of the few people in the UK hoping the current political turmoil spills over into a general election – election mailings provide Royal Mail with a useful boost and 2018 looks like it could be the first year since 2013 without a major vote in the UK.
“The letters business isn’t being helped by tough new penalties around data protection, introduced under GDPR, which are making marketers nervous about direct mailings.”