Royal Mail expects steep drop in letter volumes after personal data rules change

GDPR rules are designed to give people more control over their personal data
GDPR rules are designed to give people more control over their personal data
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Royal Mail has warned that next week's major shake-up of personal data rules may hit UK mailings as business uncertainty also takes its toll.

The group said it could see a steeper-than-expected drop in letter mailings ahead of the incoming General Data Protection Regulation (GDPR) changes.

It now expects the fall in letter volumes to be at the higher end of its 4% to 6% range, and could be more than 6% at some stages over the year ahead, with ongoing business uncertainty adding to pressures.

GDPR rules - designed to give people more control over their personal data - come into effect on May 25 and may lead to a drop in marketing mail, according to Royal Mail.

It said it had been "working closely" with the industry and its customers ahead of the introduction of GDPR, which promises to be the EU's biggest personal data shake-up since 1995.

"We have also outlined how mail can help our customers thrive in a GDPR world," Royal Mail added.

Its cautious comments came as outgoing boss Moya Greene reported a 37% fall in bottom-line pre-tax profits to £212 million for the year to March 25 due to a pension charge.

Shares in the FTSE 100 group fell 5%.

But on an underlying basis, pre-tax profits rose 1% to £565 million, while adjusted operating profits rose 1% to £694 million.

Revenues were 2% higher at £10.2 billion and it saw its best growth in parcel volumes in its core UK parcels, international and letters (UKPIL) arm for four years.

Ms Greene, who steps down next month, hailed the more than £10 billion achieved in revenues as a "significant milestone".

She added: "It has been another successful year, despite the challenging environment".

Its UKPIL arm saw underlying earnings fall to £503 million from £548 million a year earlier on flat revenues, at £7.6 billion.

The group's GLS European parcels business saw an impressive 10% hike in revenues to £2.6 billion, while its earnings lifted 16% to £191 million.

The firm expects UKPIL parcel volume and revenue growth rates to be at a similar level in the new financial year, despite the worries over letter mailings.

It added that GLS was set to have a good performance in 2018-19, but said profit margins may be impacted by continuing labour market pressures.

Ms Greene will be replaced by GLS chief executive Rico Back, who will take the reins at the start of June.

She will formally step down from the board on July 19 following Royal Mail's annual general meeting, though she will stay on at the company until September in order to ensure an orderly handover.

But Royal Mail has come under fire ahead of the AGM over its decision to pay almost £6 million to Mr Back to buy out his contract at GLS in order to replace it with a new one ahead of his appointment as chief executive.