Hargreaves Lansdown sees Royal Mail Group (LON:RMG) as ‘well placed’ to capitalise on expectations for parcel volumes, the analysts have said. The comments came as the privatised postal operator revealed a rise in full-year profits, having benefitted from growth at its parcels business and strong performance at its GLS unit, which helped offset a decline in UK letter volumes.
Royal Mail’s share price rose yesterday following the results, adding 0.65 percent to close at 433.60p. The stock outperformed significantly the broader London market, which suffered a severe selloff, pressured by concerns over Donal Trump’s presidency, with the benchmark FTSE 100 index shedding 67.05 points to end the session 0.89 percent lower at 7,436.42.
Reuters quoted Hargreaves Lansdown analyst Laith Khalaf as commenting yesterday that Royal Mail was well placed to capitalise on expectations of higher parcel volumes as more shoppers use mobile devices to order goods.
“Royal Mail has posted a solid set of results against a challenging backdrop [...] A decent rise in full-year dividend, combined with share price falls over the last year, means the stock is now yielding over five percent,” the analyst pointed out.
The comments came after the privatised postal operator said 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. Royal Mail’s revenue meanwhile came in one percent higher at £9.78 billion.
The Financial Times quoted analysts at UBS as describing the results as ‘good,’ noting that they were slightly ahead of expectations. David Jinks, head of consumer research at broker Fastlane International, however, has been less upbeat, telling The Telegraph that the company risked losing business to companies such as Amazon which are dedicated to parcel delivery.
“Royal Mail’s core UK revenues really should not be falling in this climate – the group is fortunate its GLS international business’ volumes and underlying revenue were up by nine percent, masking the decline in UK revenue,” he added.