27th Nov 2013 07:54
LONDON (Alliance News) - Royal Mail Group PLC, the postal service operator listed in a controversial initial public offering last month, Wednesday reported higher profits and revenues for the first half of its financial year as growth in parcels revenues continued to more than offset declines in letters.
The company, which is heading into the busiest period of its year as it handles millions of Christmas cards and gifts sent by post and bought online, said it had seen a limited impact from union threats to strike due to the company's privatisation, but it it still expects to report significant revenue growth in the nine months to end-December.
The threatened strike action had slowed its rate of new business wins in parcels and caused some switching to competitors, it said. That means parcels growth in the first nine months of the financial year is likely to be flat on the year-earlier period. However, it said its declining letters business had got off to a good start in the second half thanks to mailings by energy companies.
For the first half to September 29, Royal Mail reported GBP4.52 billion in revenue, up from GBP4.36 billion a year earlier.
It reported a pretax profit of GBP1.58 billion, up from GBP113 million a year earlier as it booked a GBP1.35 billion non-cash credit related to an increase in its pension surplus. Excluding that credit, pretax profit was GBP233 million, up from GBP94 million. Its closely-watched operating profit after transformation costs - the costs for its restructuring programme - rose to GBP283 million, from GBP144 million.
Parcels revenue grew 9% in the half, driven by a shift to pricing based on size, while volumes were broadly flat on the year. It blamed the hot, sunny summer for reducing the amount being bought online temporarily. Letter revenues declined 4%.
Royal Mail said it expects at this point to propose a final dividend of GBP133 million for the full year. It said that gives a notional full-year dividend of GBP200 million if the company had been listed for the whole of the financial year.
By Steve McGrath; [email protected]; @SteveMcGrath1
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