Royal Mail shares jump as it reveals savings

Shares rise at Royal Mail

Royal Mail Figures

The Royal Mail reported revenue of £4.4bn for the half year ended 27 September, two per cent down from the £4.5bn for the same period last year.

Reported profit before tax was down further, at £116m, down 31 per cent from the £167m last year, reports CityAM.

Meanwhile, reported earnings per share came in at 11.4p, down from 12.5p a year ago.

However, interim dividend per share increased to 7p, from 6.7p last year.

Why the share price is interesting

Royal Mail reported flat revenues compared with last year, in what it calls a “competitive trading environment”, and thinks the outlook over the medium and short term remains unchanged, but performance in the second half will be dependent on the “important” Christmas period.

Last month the government sold off its final stake in Royal Mail, after Ofcom revealed the scope of its review of regulation for the business in July.

Responding to the Ofcom review, Royal Mail said the regulatory environment “must allow us to be innovative and competitive” in order to sustain the universal service.

The cost savings programme, which has accelerated, and a better-than-anticipated performance in its general logistics systems (GLS), has led to “resilient performance”, the company added.

It added the programme should also result in operating costs UKPIL, its international letters and parcels business, being reduced by at least one per cent for the full year.

But aside from the regulatory gaze, the company is also being challenged by declining letter volumes, which has in the past caused it to focus on its parcels business.

Not one to miss an opportunity to complain about competition, though, it took the chance to point out that: “As a result of Amazon’s roll-out of its own delivery network we estimate that volume growth in our UK addressable parcel market has, on average, been reduced to around one-two per cent per annum in the short term.”