Royal Mail shares dive as it delivers fewer letters

The fashion for electronic Christmas cards took its toll on Royal Mail this Christmas, with the number of letters being posted in the UK continuing to fall.

Shares in Royal Mail have dropped by 5% after it said letter volumes were down 6% in the nine months to 25 December.

Its UK parcels business, however, grew, helped by a better Christmas than the previous year.

It said the number of marketing items - or "junk mail" - was also falling.

Overall revenues from its UK business fell in the final nine months of 2016 but its international business largely offset the decline.

"We are seeing the impact of overall business uncertainty in the UK on letter volumes, in particular advertising and business letters," the company said.

Royal Mail said it had delivered 2% more parcels in the nine months to Christmas day, boosting revenues from its parcels business by 3%. The company said it was on track to meet its cost-saving targets.

But total letter revenue was down 5% compared with 2015.

The company is also in the process of negotiating with labour unions over pensions and delivering a "cost avoidance" programme.