22nd May 2014 07:33
LONDON (Alliance News) - Royal Mail PLC dropped to the bottom of the FTSE 100 at the market open Thursday as the company recorded a full-year performance in line with expectations and boosted pretax profit, while continuing to face headwinds including competitive trading environment in its parcels business.
In its maiden full-year results for the year to March 30, 201, Royal Mail said reported pretax profit rose to GBP1.7 billion from GBP283 million last year. Excluding specific items, the firm said pretax profit rose to GBP363 million from GBP304 million last year.
Revenues rose 2% to GBP9.5 billion from the GBP9.1 billion recorded the previous year, said the company, driven by parcel revenue growth in its UK Parcels, International & Letters and General Logistics Systems divisions.
UKPIL revenue came in at GBP7.8 billion, up 2% on GBP7.6 billion last year, with operating profit rising to GBP309 million from GBP294 million in the division. GLS revenue was up 7% to GBP1.7 billion from GBP1.5 billion last year, with a marginal increase in operating profit to GBP108 million from GBP101 million the previous year.
Parcels remain the largest group revenue contributor, accounting for 51%, said the firm, with parcel volumes flat on the previous year with 1.1 billion items delivered.
In its first full-year figures since listing on the London Stock Exchange October 15 last year, Royal Mail recommended a final dividend of 13.3 pence per share.
Shore Capital has downgraded the company from Buy to Hold following the results, noting that the maiden figures came in "below our hopes for slightly stronger growth than that achieved at the top line."
Royal Mail said it is facing increasing challenges in the UK's parcels and letters markets. "The competitive environment on the parcels side is more intense. We are taking steps to remain the leader in this growing market. On the letters side, the headwind is direct delivery and we have strategies in place to counter its adverse financial impact," said Chief Executive Moya Greene.
Looking ahead, the firm said that while it is satisfied with its progress in 2013-2014, its key value drivers of single digit revenue growth, margin expansion and underlying free cash flow growth remain its objectives for 2014-15.
Shares in Royal Mail were trading 4.71% lower at 547.9 pence per share Thursday morning, the biggest faller on the FTSE 100.
By Alice Attwood; [email protected]; @AliceAtAlliance
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