UK’s Royal Mail focuses on costs in tough market

Intense competition in the parcels market from rivals including Amazon will leave Britain’s Royal Mail reliant on cost controls and efficiency improvements to underpin profits this year.

Parcels, which generate half of Royal Mail’s £9.4bn (€13.2bn) revenues, are the firm’s focus in light of declining letter volumes. However, growth forecasts have had to be cut because of overcapacity in the market that led to the demise of rival City Link last December.

Royal Mail forecast, last November, growth in the British parcels market would fall from 4%-5% to 1%-2% for at least two years as Amazon delivers more of its own packages and others seek to muscle in on rising online retail demand.