Royal Mail share price rises as group delivers rise in pre-tax profits

Postal operator enjoys parcels growth as letter volumes continue to decline

Royal Mail share price rises as group delivers rise in pre-tax profits

Shares in Royal Mail Group (LON:RMG) have climbed about two percent in London this morning as the postal operator revealed a rise in full-year profits before tax, having benefitted from growth at its parcels business and strong performance at its GLS unit. The number of letters posted, however, continued its downtrend.

As of 09:38 BST, Royal Mail’s share price had added two percent to 439.40p, outperforming the broader London market, with the benchmark FTSE 100 index having fallen 0.94 percent into the red to stand at 7,432.79 points. The group’s shares have lost more than 13 percent of their value over the past year, and are down by just under five percent in the year-to-date.

Royal Mail announced in a statement this morning that its profit before tax had climbed to £335 million in the year ended March 26, up from £294 million in the prior-year period. The group’s revenue meanwhile came in one percent higher at £9.78 billion.

The postal operator disclosed that its UK parcels business had seen a three-percent rise in revenues, partly offsetting a drop in total letter revenue which dipped five percent. Royal Mail’s GLS division meanwhile delivered nine-percent growth in volumes and underlying revenues.

“We have made good progress against all of our strategic priorities. This has been a more challenging period for UK businesses and we have come through it well,” the FTSE 100 group’s chief executive Moya Greene commented in the statement.

Richard Hunter, head of research at Wilson King Investment, noted that Royal Mail had delivered a solid set of numbers, underpinned by a strong contribution from its overseas business.

“Within the numbers, there are a number of promising signs, such as the investment programme having peaked, cost savings still in focus, an improvement to the earnings per share metric and a short-term boost expected by general election mailings,” the analyst pointed out, as quoted by Proactive Investors. The newswire, however, also quoted Liberum as saying that it “remained concerned about the intensity of competition in the UK parcels market, and there are still risks in agreeing new pension arrangements”.

As of 10:03 BST, Thursday, 18 May, Royal Mail share price is 433.50p.

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