Higher prices for parcels and loads of Christmas cards delivered helped Royal Mail boost revenues by 2 per cent in the past nine months, the recently privatised business reported today.
Shares in Royal Mail, which were sold at what many called a cut-price 330p last October, fell 3p to 585p.
Chief executive Moya Greene was this week at the centre of a row between Business Secretary Vince Cable and his deputy Michael Fallon over whether her £1.5 million pay should be increased.
She said: “Our financial performance to date is in line with our expectations and gives us confidence that we will deliver against our key value drivers for the full year.”
Despite strong Christmas cards business and an unexpected boost in October when energy companies sent millions of customers letters warning them of price rises, UK letter revenues fell 3 per cent on volumes down 5 per cent. That was a slightly lower decline than the 6 per cent seen in the first half.
In parcels, where Greene is concentrating her efforts, while volumes were flat, revenues were up 8 per cent as the move to boost small parcels and deter large ones through pricing continued to work.
Royal Mail said it remains by far the biggest parcels business in the UK, delivering 115 million in December with a peak 10 million delivered on the 18th. It admitted that while online shopping continues to soar there was a much larger rise in click and collect than in home deliveries.
Its eurozone parcels business, General Logistics Systems, saw a 6 per cent rise in revenues on a 5 per cent rise in volumes in the nine months. Royal Mail’s £1.7 billion privatisation saw 690,000 private investors each receive 227 shares. They paid £749 for those shares, which are worth £1328 today.
Analysts are divided on Royal Mail shares.
Panmure Gordon’s Gert Zonneveld, who was the first analyst to say they were seriously undervalued at the flotation price, changed his recommendation from buy to hold today with a price target of 570p.
Alex Patterson of Espirito Santo recommends buying the shares with a price target of 635p.
The Communication Workers Union, which is still balloting its members on a three-year pay deal it has recommended, welcomed today’s figures.