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Royal Mail said the outlook for 2020-21 is “challenging”, with the underlying decline in letter mailings failing to ease as expected.
Christmas and the general election – which coincided for the first time in nearly a century – helped narrow nine-month letter revenue declines to 1.5%.
With the election boost stripped out, however, the number of letters mailed in the first nine months of the year tumbled 9%.
Nine-month parcels revenues rose 3.7% while its European parcels arm GLS saw revenues leap 11.1% higher.
Overall group-wide revenues lifted 3.7%.
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Royal Mail said it will push ahead with its overhaul as it warned the threat of industrial action and delays to its turnaround may lead to losses in its UK letters and parcels arm.
The group said the risk of strike action by the Communications Workers Union (CWU), together with ongoing Brexit uncertainty, “increases the likelihood” of losses in 2020-21 for the letters and parcels business.
It added the industrial action fears already hurt demand for parcel deliveries over the key Christmas period, leading to lower-than-expected growth as some customers switched to rivals.
Catering giant Compass Group has warned over the effect on full-year figures of the Brexit-hit pound as it posted a hike in first-quarter sales despite currency woes.
The group – described as the world’s largest catering firm – said foreign exchange movements may hit full-year earnings by £61 million and revenues by £745 million.
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It saw an impact of this in the first quarter of £71 million and £6 million on earnings.
Organic revenues rose 5.3% over its first quarter to the end of December, thanks to a solid performance in the US.
The firm – which supplies meals for office workers, school children and the armed forces – added that cost-cutting was also offsetting lower catering demand among business and industry clients in Europe.
Compass is axing up to 4,000 jobs over the next two years amid the worsening outlook in Europe and Brexit uncertainty.
Its latest update showed that a 7.5% hike in North US sales made up for a flat performance across Europe.
As well as the weak business and industry market, Compass said Europe business was also knocked by a “less favourable sports and leisure calendar”.
Overall, Compass said it saw “an encouraging start to the year and our outlook for 2020 remains unchanged”, with organic sales growth set to be in the middle of its 4% to 6% forecast.
Shares lifted 2% after the update on Thursday morning.
Investors in travel firm On the Beach will have to wait until the second half of the financial year before seeing the full payoff from its massive push to win market share from Thomas Cook.
The online booking company, which specialises in beach destinations, said its rival’s collapse had given it an “unprecedented opportunity” to take a bigger piece of the market.
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It more than doubled the amount they spend on offline marketing, but expect that part of the hoped-for payoff will not come until later this year.
Chief executive Simon Cooper said: “The actions we have taken in the first four months of the new financial year have accelerated our market share gain and mean we are well prepared to take advantage of capacity returning into the market.
“Our incremental investment into offline marketing activity is helping to drive significant growth in awareness of the brand nationally.”
On the Beach leapt at the chance that it had when Thomas Cook collapsed. The 178-year-old business flew its last passengers last year, partly after it failed to keep up with the sector’s move online.
The failure has also pushed up prices across the industry as passengers compete for fewer available seats.
Mr Cooper and his team do not expect prices to return to normal until the next financial year at the earliest, they said.
Rising prices are not helped by the grounding of Boeing’s 737 Max aeroplanes.
