Royal Mail shares jump as group reports strong Christmas trading

22nd January 2015

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Shares in Royal Mail jumped this morning following the firm’s latest market update, which highlighted that a busy Christmas period boosted results.

By  10.10am shares in the business had moved 3%, or 14p higher to 444.7p.

In the delivery firm’s trading update for the nine months to 28 December 2014, it declared that it handled around 120m parcels in the month of December alone, 4% more than last year and that revenues overall were up 1%.

Chief executive officer Moya Greene, said: “Royal Mail delivered one of its highest ever quality of service performances for parcel delivery to our customers over the month. This is because we started to plan for Christmas in April, putting investment behind extra sorting capacity with 10 temporary hubs and training around 19,000 extra people.

“As a result, Royal Mail was able to provide customers with reliability, flexibility and high quality delivery at a competitive price. Given our performance over the Christmas period, we are confident that the outcome for the full year will be in line with our expectations.”

Graham Spooner, investment research analyst at stockbroker, The Share Centre, described the results as “reassuring for investors” as a weaker Christmas period would have put pressure on its full year forecasts, instead the guidance for the year remains unchanged”.

He said: “The group’s international parcel business delivered an 8% rise in revenue. We recommend Royal Mail as a ‘hold’ for medium risk investors. Given its performance over the Christmas period, the company is confident that it will meet its full year profit expectations. However, whilst the group continues to focus on costs, investors should be aware that competition from the likes of Amazon continues to put a squeeze on revenue growth.”

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