Royal Mail’s pre-tax profit shrinks to £17 million in the fiscal first half
- Royal Mail’s pre-tax profit shrinks to £17 million in the fiscal first half.
- The postal service reports £5.67 billion of revenue in the first six months.
- Royal Mail says its GLS business registered £150 million of pre-tax profit.
Royal Mail plc (LON: RMG) said on Thursday that its profit in the fiscal first half was lower than last year. The company, however, raised its guidance for annual revenue.
Royal Mail opened more than 2.5% up on Thursday and rallied another 7% in the next hour. On a year to date basis, the stock is now more than 30% up – which is worth considering before you buy Royal Mail shares that had plummeted to as low as £94 per share in the first week of April.
Royal Mail says GLS business noted £150 million of pre-tax profit
Are you looking for fast-news, hot-tips and market analysis? Sign-up for the Invezz newsletter, today.
For the six months that concluded on 27th September, Royal Mail posted £17 million of pre-tax profit versus the year-ago figure of £173 million. On an adjusted basis, its operating profit printed at £37 million. In the same period last year, its adjusted operating profit stood at a sharply higher £165 million.
The postal service attributed its dovish performance to mix change, voluntary redundancy, COVID-19 crisis, and international conveyance. Royal Mail saw £133 million of pre-tax loss in H1 from the U.K. parcels, international and letters segment versus £95 million of profit in the comparable period of last year.
The GLS business, it added, registered a pre-tax profit of £150 million in the first half. In H1 of fiscal 2020, profit from GLS segment was capped at a lower £78 million. In separate news from the United Kingdom, outsourcer Mitie Group revealed a 35% decline in its H1 profit on Thursday.
Royal Mail reports £5.67 billion of revenue in fiscal H1
In terms of revenue, the courier service noted £5.67 billion in the fiscal first half versus a lower £5.17 billion last year. The company said the revenue growth was primarily because of robust demand for parcels in H1 at both GLS and Royal mail.
For the full financial year, the London-based company now forecasts £380 million to £580 million. But Royal Mail also warns that Coronavirus and mix change-related costs are also likely to jump further in the upcoming months.
The board decided in favour of keeping dividend payments suspended to cushion the economic blow from the ongoing COVID-19 crisis, that also pushed it into laying off 20% of its managers in June. Royal Mail had declared 7.5 pence per share of dividend last year.
At the time of writing, Royal Mail is valued at £3.08 billion and has a price to earnings ratio of 19.12.