Royal Mail full-year profit up 25.5% but sales seen declining

Royal Mail reported a 25.5% jump in full-year pre-tax profit as revenues nudged higher, although the group did caution that sales in the UK are likely to fall.

For the 52 weeks to 26 March, pre-tax profit rose to £335m from £267m on revenue of £9.8bn, up from £9.3bn the year before.

In UKPIL, which comprises the company's core UK and international parcels and letter delivery businesses, revenues were down 2% on an underlying basis to £7.7bn, with parcel revenue up 3% but total letter volume down 5%. However, this was more than offset by the performance of parcel delivery service GLS, which saw its revenues rise 9% to £2.1bn.

The company proposed a full-year dividend of 23p per share, up 4% from 2016.

Chief executive officer Moya Greene said: "We have made good progress against all of our strategic priorities.This has been a more challenging period for UK businesses and we have come through it well.

"Our multi-year focus on costs is a key priority. We are on track to avoid around £600m of annualised costs in UKPIL by 2017-18. We are past the peak of investment; we now expect net cash investment of around £450m in 2017-18."

Royal Mail maintained its outlook for addressed letter volume to decline between 4% and 6% a year excluding the impact of political parties' election mailing and said it expects to reach the higher end of its range in 2017-18 if business uncertainty persists.

In addition, it forecasts net cash investment of around £450m in 2017-18 and less than £500m a year going forward.

At 0807 BST, the shares were up 3.3% to 444.90p.