International Distribution Services PLC on Wednesday said it expects Royal Mail to return to profitability this financial year as its takeover deal presses ahead.

London-based IDS, which owns Royal Mail, reported a positive performance for the three months to the end of December, with revenue growing 0.8% to £3.62 billion from £3.59 billion the prior year.

Driving this improvement was a strong performance in Royal Mail over the golden quarter, with over 99% of items posted ahead of or on the final recommended dates arriving in time for Christmas.

Revenue for the British postal service grew on-year by 2.4% to £2.34 billion from £2.28 billion, boosted by an increase in total parcel revenue which rose 3.2% to £1.25 billion from £1.21 billion.

Parcels volume also rose for Royal Mail, up 2.0% on-year to 395 million from 387 million, with IDS noting that it is on track to return to adjusted operating profit for the full year. Last financial year, it reported an adjusted operating loss of £336 million.

Revenue for the firm’s European parcel delivery business, GLS, fell 2.0% to £1.28 billion from £1.31 billion the prior year. However, IDS noted that revenue growth for the division in euros, excluding acquisitions and disposals, was up 2.5% on-year.

Volume for the segment rose by 0.8% in the third-quarter to 247 million from 245 million the prior year, with IDS noting the division recorded strong performances in Spain and Poland, but with the Italian and German markets remaining challenging.

The firm added that it expects the £3.57 billion takeover offer made last year from Czech billionaire Daniel Kretinsky’s EP UK Bidco Ltd to become or be declared unconditional in the first quarter of this calendar year.

IDS shares were up 0.1% at 364.40 pence on Wednesday morning in London

IDS Chief Executive Martin Seidenberg said: ‘I am proud of my colleagues across Royal Mail and GLS who went above and beyond for our customers this Christmas. At Royal Mail, we have made more progress to adapt to customer demand. Successful execution of our union agreements is bringing increased operational flexibility, which together with increased automation, and thousands of new vehicles, is leading to improved reliability.’

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