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.
Wellcome Image Awards: The most striking images from the world of science, including breast cancer cells under chemical attack and a photographer’s own kidney stone
Missing Malaysia Airlines plane: Terrorism explanation 'cannot be ruled out', says CIA
Bob Crow death: 'Admired by his members, feared by employers' - Tributes pour in for RMT union leader and 'working class hero' Bob Crow
Oscar Pistorius murder trial: Athlete repeatedly sick as court hears 'graphic details' of Reeva Steenkamp's post-mortem
How climate change helped Genghis Khan: Scientists believe a sudden period of warmer weather allowed the Mongols to invade with such success
Britain's top vet sparks controversy with call for ban on slashing animals' throats in 'ritual' slaughters for halal and kosher meat products
Poor 'live like animals' says Boris's privately educated sister after going on 'poverty safari'
Exclusive: Impact of immigrants on British workers ‘negligible’
Vince Cable: Teachers 'know absolutely nothing' about the world of work
Ukraine crisis: Russia pledges to 'retaliate against sanctions' as Ukrainian president says Crimea vote will not be recognised
The quiet diplomat: Catherine Ashton - recognised and admired in all the world’s troubled countries, yet ridiculed at home
- 1 Pakistan vs Paul Smith: Sandal-wearers bemused by famed British designer's attempts to sell traditional Peshawari chappal-style shoes for the distinctly untraditional sum of £300
- 2 Family forced to flee home after discovering 'terrifying' nest of spiders in bananas
- 3 Grace Dent: Who cares if she spells it Barraco Barner? Gemma Worrall is more employable than some bookish arts graduate
- 4 Russell Crowe's Noah banned in three Arab countries before worldwide premiere
- 5 Bob Crow death: 'Admired by his members, feared by employers' - Tributes pour in for RMT union leader and 'working class hero' Bob Crow
iJobs Money & Business
£1000 per month: Inspiring Interns: The company works with Tier 1 FTSE 100 Ban...
£35000 - £60000 per annum + Bonus + Benefits: Pro-Recruitment Group: You must ...
£60000 - £80000 per annum + BONUS + BENEFITS: Harrington Starr: A top, City ba...
VOLUNTARY ONLY - EXPENSES REIMBURSED : Reach Volunteering: Fantastic opportuni...