Sep 3, 2018

Royal Mail scoops up Canadian parcels company

Royal Mail has increased its push into North America with the C$360m purchase of a Canadian parcels company, as it continues to struggle with heightened regulation and competition at its flatlining UK business. As well as being under constant threat from the growth of Amazon in the UK, Royal Mail's British business has also been dented by sweeping EU privacy reforms that have made it harder to send junk mail to individuals. In the three months to June 24, volumes in Royal Mail's so-called addressed letter business, for which it charges companies the price of a second class stamp to send marketing mail to named recipients, fell 6 per cent on a year earlier. GLS has propped up Royal Mail's earnings in recent years and is expected by analysts to occupy a larger role in the group in future as the FTSE 100 company continues making overseas acquisitions. In the year to May, while Royal Mail failed to achieve any revenue growth in its UK business, sales at GLS rose by 10 per cent on the previous financial year to £2.6bn. This came after Royal Mail resolved a long and bitter industrial dispute in Britain triggered by its closure of a generous pension fund, which threatened to erupt into the first nationwide postal strike since privatisation.

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