The company delivered 6 per cent fewer letters in the nine months to December 25 than the year before, pushing revenues in the letter division down 5 per cent, the Telegraph reports.
In the first six months of the financial year, letter volumes dipped 4 per cent, indicating that the decline worsened during the Christmas period.
Royal Mail said: “We are seeing the impact of overall business uncertainty in the UK on letter volumes, in particular advertising and business letters.”
The company had warned in an update to the City in November that revenue from junk mail and circulars had dipped 8 per cent in the first half of the financial year as businesses scaled back their spending due to wider economic uncertainty.
Royal Mail’s parcel arm performed better: around 2pc more parcels were sent than in the previous year, pushing revenue 3 per cent higher.
Overall, revenue for the company’s UK Parcels, International and Letters arm declined 2 per cent, while revenue at its European parcels business General Logistics Systems (GLS) roses 9 per cent, meaning its total revenue for the whole company was flat.
Shares in Royal Mail opened at their lowest price for more than a year, at 435.6p, before dropping another 5p to make them the worst performing stock in the FTSE 100 this morning.
Despite this, Moya Greene, chief executive of Royal Mail, said the firm’s money-saving programme was on track and that its operating costs would drop by 1pc during the current financial year. The firm revealed in November that it wants to save £600m annually in its core UK business.
Royal Mail announced earlier this month that it would consult on changes to its final salary pension scheme, saying the expected £400m annual increase to its contributions was unaffordable. It needs to find a new way to fund the scheme after 2018, when the current £1.7bn surplus is expected to run out.
Union representatives have threatened strike action over the proposed changes, which would mean around 90,000 workers who are yet to retire would be moved to a defined contribution scheme rather than the current final salary scheme. The consultation closes in March.
Royal Mail said today that no decision would be made about the future of the scheme until the consultation process is completed. “Royal Mail has considered members’ views, and discussed responses with its unions as part of the pension review process,” it said.
Analysts suggested that moving to the new system would result in wages going up at a faster pace, as well as a one-off incentive payment to staff.
Wages and labour account for 67 per cent of costs of its UK business, according to analysts, so negotiations could prove crucial for the ongoing health of the company.
