Royal Mail shares rally as profits more than double in first results as private company

 

Shares of Royal Mail rallied in early trading after half-year profits more than doubled to £233 million, as the newly-privatised postal operator benefited from strong demand for online shopping.

But chief executive Moya Greene used the results to warn that Royal Mail was being hampered by union strike threats.

She said: “Parcel customers have lots of options, and online retailers desperately need a reliable service in the lead-up to Christmas. Even the threat of a strike is going to cause some people to look to other options.”

She added that potential new customers were holding off from signing deals, and said: “The threat of a strike in any business is a very big concern, and in our business it’s horrible — we are the distribution arm for much of online retail in the UK.”

Overall Royal Mail’s pre-tax profits hit £1.6 billion for the year to October but, stripping out the windfall from new pension accounting, profits jumped from £94 million last year to £233 million.

Revenues inched up 2% to £4.5 billion, as a 4% decline in earnings from letters was offset by a 9% rise in parcel revenues. The number of posted letters fell 6% — although Royal Mail said it was boosted by the Big Six energy firms’ price hikes as they sent letters to  customers warning them of the rise.

Today’s results saw shares rise 31p to 563.5p — 71% higher than the £3.30-per-share float price.

But asked whether Royal Mail was now overvalued, Greene said: “It’s not for me to comment on the share price. All I can say is that this was the most complex transaction of my career, and I think the Government did a good job.” She also “couldn’t comment” on whether she would personally invest in Royal Mail at the current price.

As part of an agreement with industry regulator Ofcom, Royal Mail can decide its own first-class stamp prices until 2019, although second-class stamp prices can only rise with inflation. Asked whether the profit boom meant Britons would be spared another price hike next year, Greene said: “I’m not going to say anything about prices. [But] we didn’t raise prices last year.”

Sunday deliveries will be introduced during the run up to Christmas  and households may also have an extra daily delivery round of parcels to cope with demand. The company has opened 10 temporary parcel sorting centres and hired an extra 21,000  temporary staff for Christmas mail.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Content Writer - Global Financial Services

£25000 - £30000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Web Developer - PHP

£35000 - £40000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Field Sales Consultant - Financial Services - OTE £65,000

£15000 - £65000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Loan Underwriter

£18000 - £20000 per annum: Recruitment Genius: This is a fantastic opportunity...

Day In a Page

Orthorexia nervosa: How becoming obsessed with healthy eating can lead to malnutrition

Orthorexia nervosa

How becoming obsessed with healthy eating can lead to malnutrition
Lady Chatterley is not obscene, says TV director

Lady Chatterley’s Lover

Director Jed Mercurio on why DH Lawrence's novel 'is not an obscene story'
Farmers in tropical forests are training ants to kill off bigger pests

Set a pest to catch a pest

Farmers in tropical forests are training ants to kill off bigger pests
Mexico: A culture that celebrates darkness as an essential part of life

The dark side of Mexico

A culture that celebrates darkness as an essential part of life
Being sexually assaulted was not your fault, Chrissie Hynde. Don't tell other victims it was theirs

Being sexually assaulted was not your fault, Chrissie Hynde

Please don't tell other victims it was theirs
A nap a day could save your life - and here's why

A nap a day could save your life

A midday nap is 'associated with reduced blood pressure'
If men are so obsessed by sex, why do they clam up when confronted with the grisly realities?

If men are so obsessed by sex...

...why do they clam up when confronted with the grisly realities?
The comedy titans of Avalon on their attempt to save BBC3

Jon Thoday and Richard Allen-Turner

The comedy titans of Avalon on their attempt to save BBC3
The bathing machine is back... but with a difference

Rolling in the deep

The bathing machine is back but with a difference
Part-privatised tests, new age limits, driverless cars: Tories plot motoring revolution

Conservatives plot a motoring revolution

Draft report reveals biggest reform to regulations since driving test introduced in 1935
The Silk Roads that trace civilisation: Long before the West rose to power, Asian pathways were connecting peoples and places

The Silk Roads that trace civilisation

Long before the West rose to power, Asian pathways were connecting peoples and places
House of Lords: Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled

The honours that shame Britain

Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled
When it comes to street harassment, we need to talk about race

'When it comes to street harassment, we need to talk about race'

Why are black men living the stereotypes and why are we letting them get away with it?
International Tap Festival: Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic

International Tap Festival comes to the UK

Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic
War with Isis: Is Turkey's buffer zone in Syria a matter of self-defence – or just anti-Kurd?

Turkey's buffer zone in Syria: self-defence – or just anti-Kurd?

Ankara accused of exacerbating racial division by allowing Turkmen minority to cross the border