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Author: Alan LittleDate: 2021-05-21

Royal Mail (RMG) +2.63% as parcel revenues boost yearly profit

Royal Mail (RMG) shares closed 2.63% higher in London after the postal service company said that profits soared +400% to £726m in the latest financial year following an online shopping boom.

 

Letters have traditionally been the key driver for Royal Mail’s revenues during its prestigious 500-year history, but this changed during the pandemic as the demand for deliveries skyrocketed.

 

The new trend saw parcel revenues jump 39% as overall revenues climbed 16.6% to £12.6bn in a windfall that has finally given Royal Mail the “breathing space” to make positive structural changes.

 

In a sign of the quick reversal of fortunes, chief executive Simon Thompson said in a statement that “loss-making” was expected a year ago.

 

He added: “It has been challenging at times but we have learnt that we can deliver results and change at lightning pace when we are united by a common purpose.”

 

The easing of COVID-19 restrictions has not had an adverse impact yet as Royal Mail noted that trading was strong in April with revenues for that month rising 24% from a year ago.

 

However, it did caution that “significant” uncertainty in the short term is still making it challenging to provide exact guidance for the year ahead.

 

Royal Mail shares did tumble into negative territory early on Thursday, but a late rally saw RMG finish up 2.63% at 539.80p.

 

The company’s impressive recent performance has increased its market value to £5.2bn and resulted in the first one-off dividend payment since January 2020.

 

Hargreaves Lansdown analysts also predicted earlier this week that Royal Mail could return to the FTSE 100 following the next reshuffle in June.

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