Royal Mail blames competitors Amazon for fall in share prices

SHARES in parcels and letters group Royal Mail fell sharply after it blamed competition from US online giant Amazon for posting falling profits.

Royal Mail delivery warehouseGETTY

Royal Mail said increased competition led to drop in revenues

Royal Mail, which shed 39¼p to 430p, said Amazon’s decision to set up its own delivery network had left its ­parcels arm “chasing fewer packages” and would cut growth in the sector from the annual rate of 6 per cent, which it had predicted at the time of last year’s float, to between 1 and 2 per cent for at least two years.

Despite parcel volumes rising 2 per cent in the six months to Sept­ember 28, Royal Mail said the increased competition had led to falling prices leaving revenues at the arm down 1 per cent to £1.5billion.

Chief executive Moya Greene vowed defiantly that the group would retain its position as the UK’s number one parcel delivery group, saying: “Amazon disrupts markets – they did it to books and to music.

We were never dependent on Amazon traffic but we have to innovate and find new ways to grow and remain number one.”

Royal Mail, she argued, had already made big changes such as introducing Sunday parcel deliveries and collections, as well as offering bigger parcel sizes this Christmas for larger presents.

Amazon disrupts markets – they did it to books and to music

Moya Greene

It is also looking to seal more delivery deals with leading clothing and footwear firms such as Boohoo.com.

However it has no plans to follow Amazon’s drone delivery plans. “Our technology used to be ‘state of the ark’ but our shipping and tracking systems are brilliant now.

It is a ‘no’ to drones but I will be very interested to hear what Amazon do with that,” Greene said.

Overall group profits fell to £218million from £233million last time on revenues down 2 per cent to £4.5billion. Letter volumes fell a better-than-expected 3 per cent helped by Scottish referendum campaign leaflets and more marketing mail from businesses.

“We keep talking to charities, consumer groups and businesses about the power of a well-drafted written message,” Greene said.

She also called on Ofcom to speed up its review of the direct delivery market – currently planned for late 2015 – reaffirming its warning that it threatens the universal delivery service.

It said competition from Whistl, formerly TNT Post UK, could cut £200million of its revenues next year.

Would you like to receive news notifications from Daily Express?