Royal Mail, the former government owned delivery service that launched an IPO in October 2013, revealed a 1% rise in revenue for the full year ending on March 29, 2015.
The group also said in its results statement that operating profit also rose to £740 million ($US1.14 billion), from £729 million ($US1.13 billion) in the previous year.
In October 2013, Royal Mail shares started trading in London at 330p per share. The stock price now hovers around the 500p mark, which is nearly 13% above the IPO offer price.
Today, the stock opened nearly 3% lower because of the company’s “challenging” outlook.
“Our continued focus on efficiency resulted in a better than expected UK cost performance, offsetting lower than anticipated UK parcel revenue. At the same time we have delivered a large number of innovations at pace as we transform our business,” said Moya Greene, CEO of Royal Mail. “Our trading environment remains challenging, but we are now poised to step up the pace of change to drive efficiency, growth and innovation, while maintaining a tight focus on costs.
“At this early stage of the financial year trading is in line with our expectations, but as in previous years our performance will be weighted to the second half and will be dependent on our important Christmas period. We remain committed to delivering value for our shareholders and the Board is recommending an increase in the full year dividend of 5%.”
Although Royal Mail warned about the “challenging trading environment,” it is set to get slightly easier for the group. Its biggest rival Whistl, formerly TNT Post, announced last week that it is cutting door-to-door services in London, Liverpool and Manchester and will instead rely on Royal Mail for what it calls “final mile” delivery – getting letters and parcels from local distribution centres to your letter box.