Though the British postal service company stated its performance in the first nine months of the financial year was in line with expectations, the group’s UK Parcels, International & Letters unit continued to flounder.
Even during a busier than usual Christmas delivery period, group revenue remained flat, impacted by the 5% dip in total letter revenue. The group said persistent “business uncertainty in the UK” was to blame for the 6% drop in letter volumes.
By contrast, UK parcel volumes were up 2%, with the consumer channel driving revenue. In December alone, Royal Mail postmen and postwomen delivered 138m parcels, topping last year’s figure.
Royal Mail’s largest shareholders include Artemis, Aberdeen Asset Management, Troy Asset Management and Henderson Global Investors.
While there were positive takeaways for investors in Thursday’s update, including reassurance from CEO Moya Greene that the “cost avoidance programme remains on track,” The Share Centre’s Ian Forrest said there remains a divergence of opinion amongst analysts as to the prospects for the group.
“Income seekers may be attracted, with a prospective yield of around 5% and a forward estimated P/E of 11,” he said. “For the time being the market appears to be focussed on the growing threat of competition and falling letter volumes, so we would suggest potential investors watch the situation
