Royal Mail end of year profits stable

Royal Mail has announced that its revenues for the year end 27 March were up 1% with a 1% drop in its underlying UK costs.

According to the Chief Executive Moya Greene, the company had “delivered a resilient performance in challenging markets”.

Greene added, “Our UK parcel revenue and volumes grew by 1% and 3%, respectively. Our addressed letter volumes declined by 3%; total letter revenue by 2%. GLS, our European parcel business, continued to perform strongly, supporting the overall Group revenue performance.

“We are introducing new and improved products and services and responding quickly to changing customer needs. These measures, alongside our emphasis on customer focus and delivering a value for money service, have helped us to maintain our pre­eminent position in UK letters and parcels and driven growth in GLS.”

Before transformation costs, the adjusted operating profit was £742 million, up 5% on the previous year. Adjusted operating profit margin after transformation costs declined 10 basis points that Royal Mail said was a ”result of increased transformation costs due to our cost avoidance and efficiency programme”.

David Cheetham, Market Analyst at, said: “Royal Mail have posted a resilient set of results for the 12 months ended March 27th 2016 that have come in slightly above analysts’ estimates.

“Whilst the earnings per share showed a slight decline to 41.3p from 42.8p previously, this is still above a consensus call of 38.7p. In addition to this beat on expected earnings, the announcement of an increase in dividends to 22.1p will please shareholders after a challenging year performance wise as the 500-year old institution has had to adapt to rivals pushing investment in technology as well as companies like Amazon expanding their UK operations.

“A rise in UK parcel revenue and volume has offset the drop in numbers for addressed letters and with planned transformation costs of £160 million for 2016-17 as well as the share price closing yesterday near the upper-end of its recent range the company seems well placed to deliver an impressive performance going forward.”