Royal Mail share price steady as group posts rise in profits

Postal operator warns of potential industrial row impact on performance

Royal Mail share price steady as group posts rise in profits

Shares in Royal Mail Group (LON:RMG) have been little changed in London this morning, giving up earlier gains, as the privatised postal operator reported a rise in profits for the first half of its financial year. The results, however, come amid an ongoing row with the Communication Workers Union (LON:CWU) which could potentially impact the company’s performance going forward.

As of 08:58 GMT, Royal Mail’s share price had added 0.33 percent to 390.30p, having jumped more than three percent in early morning trade. The current advance is largely in line with the broader market, with the mid-cap FTSE 250 index currently standing 0.37 percent higher at 19,766.64 points.

Royal Mail sees profits rise

Royal Mail announced in a statement this morning that its adjusted operating profit before transformation costs had jumped seven percent to £323 million in the first half of its financial year. Revenue meanwhile rose two percent on an underlying basis, on the back of strong performance at the group’s GLS business.

“We had a good start to the year,” Royal Mail’s chief executive Moya Greene commented in the statement, adding that the postal operator’s full-year performance “will be dependent on the important Christmas period”.

The mid-cap group also cautioned that ‘the industrial relations environment’ could impact its performance in the second half, with the company currently in external mediation with the CWU. The union has threatened industrial action over the operator’s proposed changes to its pension plan.

‘More of the same’

“More of the same from Royal Mail with good growth in parcels and GLS while letters are in freefall decline,” ETX Capital senior market analyst Neil Wilson commented, as quoted by City A.M., adding that labour negotiations were hanging over the stock.

Royal Mail has  “so far avoided a Christmas strike (which would be disastrous) but concessions mean higher labour costs eating into profits,” he pointed out. 

As of 09:06 GMT, Thursday, 16 November, Royal Mail share price is 389.00p.

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