Royal Mail share price dips as group posts fall in pre-tax profits

on May 19, 2016
Updated: Oct 21, 2019

Shares in Royal Mail Group (LON:RMG) have lost nearly four percent in London this morning after the postal operator reported that its pre-tax profit had slipped in the financial year to the end of March. The company further noted that market conditions remained challenging.

As of 08:59 BST, Royal Mail’s share price had fallen 3.92 percent to 488.10p, underperforming the FTSE 100 which is currently 1.11 percent worse off at 6,097.39 points. The shares have lost nearly one percent of their value over the past year, but are up some 11 percent in the year-to-date.
Royal Mail announced in a statement today that its reported profit before tax had slipped to £267 million in the 12 months ending 27 March, from £400 million in the prior-year period. On an adjusted basis, the group’s pre-tax profit fell to £538 million, from £569 million a year ago. Royal Mail’s adjusted revenue meanwhile came in one percent higher at £9.25 billion. Despite the fall in profits, the FTSE 100 postal operator hiked its payout to shareholders by five percent to 22.1p.

“We have delivered a resilient performance in challenging markets,” Royal Mail’s chief executive Moya Greene commented in the statement, adding that the FTSE 100 group continued to invest in its transformation to support growth.
Going forward, the company flagged £160 million in costs associated with its UK transformation for the current financial year. Reuters quoted analysts at Liberum as commenting that this was higher than the market average, which stood at £142 million, and could drag down Royal Mail’s results for the year ending March 2017.
The privatised group further cautioned that outlook for UK letter and parcel market trends remains unchanged, and that the rate of revenue growth for the company’s European delivery arm, GLS, is expected to slow in the next year.
As of 09:36 BST, Thursday, 19 May, Royal Mail share price is 488.35p.

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