Royal Mail share price rallies as group posts rise in Q1 revenue

Letter volumes continue to decline

Royal Mail share price rallies as group posts rise in Q1 revenue

Shares in Royal Mail Group (LON:RMG) have surged in London this morning, as the company posted a small rise in first-quarter revenues. The results come against the background of an ongoing pension row as the Communication Workers Union (CWU) rejected the postal operator’s newest proposal which offers employees a choice between a defined benefit or contribution pension scheme.

As of 08:43 BST, Royal Mail’s share price had added 3.36 percent to 412.21p, outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.55 percent lower at 7,363.40 points. The group’s shares have lost a little over 18 percent of their value over the past year, and remain just under 11 percent down in the year-to-date.

Royal Mail announced in a statement this morning that its revenue had climbed one percent in the three months ended June 25, driven by strong performance at the company’s GLS division. The company further posted a three-percent rise in revenue from parcels, which helped offset a four-percent fall in letter revenues.

“Our performance in letters was better than we expected, despite continued business uncertainty in the UK,” Royal Mail’s chief executive Moya Greene noted in the statement, adding that the company remained on track to deliver its cost avoidance and net cash investment targets for the full year.

The Telegraph quoted Hargreaves Lansdown analyst Nicholas Hyett as commenting that Royal Mail had “emerged as the one clear winner of last month’s general election, with political mailings helping to slow the inexorable decline in UK letter volumes”.

“However, increasingly it’s the international business which will be driving growth long term,” the analyst pointed out.

The blue-chip postal operator further updated investors on its pension negotiations, noting that it was continuing to discuss future pension arrangements with the CWU.

As of 09:12 BST, Tuesday, 18 July, Royal Mail share price is 410.20p.

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