Royal Mail delivers surge in first-half profits

Newly-privatised delivery service Royal Mail today said that rising revenues from its parcels business and ongoing cost cuts helped its operating profits almost double in the first half of the year.

The group also said that its letters business has made a good start to the second half, boosted by mailings from energy companies.

For the six months to September 29, Royal Mail posted an operating profit of £283 million, up from £144m for the same period a year earlier, on revenues 2 per cent higher at £4.5 billion.

No interim dividend will be paid, but chief executive Moya Greene said that, “in the absence of unforeseen circumstances”, the firm plans to pay out £133m in final dividends for the full year.

With Royal Mail’s busiest period of the year approaching, Greene said some customers had been switching their business to rival parcel firms “in anticipation of strike action”. The firm has until 3 December to reach an agreement with the Communication Workers Union on pay and working conditions.

Greene said: “Depending on the strength of the seasonal parcels volume growth in late November and December, this may result in Royal Mail reporting broadly unchanged parcel volumes but significant revenue growth for the nine months to December.”

Shares in the group rose more than 6 per cent to 565.5p and are now more than 70 per cent higher than the 330p they floated at last month.