Royal Mail reports drop in half-year profits but the group’s share move higher

19th November 2015


Royal Mail shares jumped in early trading on Thursday despite the group announcing a fall in half-year profits.

For the six months to 27 September the FSTE 100 listed group reported pre-tax adjusted profit of £240m, 16% lower than the £287m achieved during the same period last year.

Over the term, revenues were flat, with growth in UK and European parcels offsetting the decline in UK letter revenue.

But by 08:51am the delivery firm’s stock had moved 26p higher, marking a 6% rise to 480.2p.

The company said that parcel volumes were up 4%, partly driven by new customer wins however letter volumes slumped by 4%.

It added that “transformation costs” doubled to £97m which it said reflected higher levels of voluntary redundancy costs, with nearly 3,000 employees leaving the group.

All eyes will now be focused on how the group performs during the Christmas period – its busiest time of year.

Commenting on the results Royal Mail chief executive Moya Greene, said: “We have delivered a resilient performance in the first-half demonstrating our ability to respond to a competitive trading environment. We delivered parcel volume and revenue growth in the UK, which continues to be a challenging market.

“Addressed letter volume decline was at the better end of our forecast range. We are driving through a range of product innovations and service improvements at pace, as well as targeting new areas of growth and enhancing our offering.

“As in previous years, the full year outcome will be dependent on our important Christmas period, for which we have extensive preparations in place.”

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