Royal Mail hails 'good' Christmas as it moves closer to union deal

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Royal Mail has said it handled 149 million parcels in a "good" Christmas for the group and confirmed it was edging closer to an agreement with unions.

The FTSE 250 firm saw a 6% rise in the number of parcels handled year-on-year in December amid the ongoing trend towards online shopping.

Overall group revenues rose 2% for the first nine months of the group's year, with the number of parcels handled up 6% and addressed letters remaining under pressure, but falling by a better-than-feared 5%.

Royal Mail said it was making progress in talks with the Communication Workers Union (CWU) over pay and pensions after the union had threatened to strike before the crucial Christmas season.

Moya Greene, chief executive of Royal Mail, said: "We have had a good performance over the important Christmas period thanks to the hard work and dedication of our people."

On talks with unions, she added: "We have agreed the fundamental principles on some of the key issues and talks are ongoing to finalise these and other areas.

"We believe we can reach agreement on an affordable and sustainable pension solution and a pay deal that will enable us to continue to innovate and grow."

Royal Mail had warned last November that industrial action and efforts to reach a deal could knock its second-half performance.

But the group saw its parcels arm drive a solid third-quarter performance, with revenues for the division up 4% in the nine months, helped by a new cross-border traffic initiative for international business.

Letter revenues fell 3% in the nine months, but its European parcels business, General Logistics Systems (GLS), saw revenues jump 10% over the nine months.

The group said it expects a broadly similar performance for the full-year from parcels and letters, while GLS growth is likely to remain in line with the first half.