Royal Mail’s (RMG) shares rose 6 per cent on the back of these maiden results - they're now hovering just short of the high point hit in the first few weeks after October's flotation. While the controversy over the ‘too cheap’ 330p float price continues to rumble on, Royal Mail is getting on with the job in hand.
Work to control costs paid off with a 190 basis point leap in the operating margin, so underlying cash profit rose 19 per cent to £483m. The reported numbers were boosted by a one-time, non-cash benefit - due to pension reform. Exclude the exceptionals and pre-tax profit still reached £233m; up from £94m a year earlier.
Chief executive Moya Greene said key strategic priorities included managing the structural decline in the letters business and capitalising on a strong position in the faster growing parcels business, which is benefiting from growth in online shopping. Ms Greene played down strike worries and said that all sides were working hard to conclude an agreement: "I am very optimistic we will get there soon".
Royal Mail will pay a final dividend for the full-year of £133m, or 13.3p a share. Current analysts' consensus estimates are for a total dividend of 23.1p for 2014-15 and adjusted full-year EPS of 35.4p, rising to 45.9p in 2014-15.
ROYAL MAIL (RMG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 564p | MARKET VALUE: | £5,640m | |
| TOUCH: | 546-565p | 12-MONTH HIGH: | 595p | LOW: 420p |
| DIVIDEND YIELD: | nil | PE RATIO: | 7 | |
| NET ASSET VALUE: | 239p | NET DEBT: | 30% | |
| Half-year to 29 Sep | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 4.36 | 0.11 | 37.7 | nil |
| 2013 | 4.52 | 1.58 | 122 | nil |
| % change | +4 | +1298 | +224 | - |
