Royal Mail predicts cheaper parcel post in the next year as profits fall 16%

Royal Mail has predicted that customers will enjoy cheaper parcel post in the coming year, as capacity in the market continues to put pressure on prices.

The UK’s privatised postal business struck a confident note ahead of the crucial Christmas season, as it reported a “resilient” performance and said that operating costs had been reduced by 1% and could fall further in the full year.

The market reacted well to the results with Royal Mail shares climbing 6% to 481.3p.

On slightly lower revenues of £4.4 billion for the first six months of the year, adjusted pre-tax profits fell by 16% to £240 million after significant investment in the business and redundancy costs.

The postal company is facing severe competition in the parcels business but managed to increase parcel volumes by 4%.