Royal Mail first half profits almost double

LONDON Wed Nov 27, 2013 3:26pm GMT

A Royal Mail post box is seen in central London October 16, 2013. REUTERS/Stefan Wermuth

A Royal Mail post box is seen in central London October 16, 2013.

Credit: Reuters/Stefan Wermuth

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LONDON (Reuters) - Royal Mail said rising parcel revenue and ongoing cost cuts helped the newly-privatised postal operator almost double its operating profit in the first half of the year.

Reporting for the first time as a London listed company following the government's high-profile sale of a 60 percent stake, Royal Mail said on Wednesday operating profit after transformation costs had jumped to 283 million pounds.

That figure for the six months to September 29 was 96.5 percent ahead of the 144 million pounds posted in the same period a year ago, helped also by a one-off VAT credit of 35 million pounds and lower than expected transformation costs.

Like-for-like revenue grew 2 percent to 4.52 billion pounds, as online shopping fuelled parcel sales, which account for 51 percent of the group, offsetting falling letters revenue. Operating profit margin grew 190 basis points to 5.2 percent.

The group, which is closing mail centres and improving operations to handle Briton's growing penchant for parcels, said parcel volumes had been flat in the period due to an e-shopping slowdown in the hot summer but said it would post "significant revenue growth" for the nine months to December.

The group will pay a final dividend of 133 million pounds for the full-year.

The privatisation of Royal Mail has dominated British headlines in 2013, with criticism from unions and opposition lawmakers intensifying since shares in the firm rocketed by as much as 80 percent above the government's 330 pence offer price.

Later on Wednesday Vince Cable, the minister in charge of the privatisation, will be quizzed before a parliamentary committee on whether the sale has shortchanged the taxpayer.

Cable's appearance follows that last week of the banks that helped broker the sale, who rejected claims that the postal firm could have been sold at its current higher price.

Shares in the firm closed at 533 pence on Tuesday.

The results come a day after Royal Mail and the Communication Workers Union extended a deadline for an agreement on pay and working conditions until December 3.

(Reporting by Neil Maidment; Editing by Kate Holton)

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