Despite concerns for Royal Mail long term attractions remain for investors

Graham Spooner, investment research analyst at The Share Centre, explains what Royal Mail’s latest trading update means for investors.
 
“This morning’s trading update revealed a mixed bag of fortunes for Royal Mail. Investors will be concerned to see parcel deliveries, which account for the largest part of Royal Mai’s business, perform weaker than expected as the strength of the competition begins to bite. The strength of the sterling also had a negative effect.
 
“However, surprisingly its letters business is performing better than expected which is a positive. In addition to this, continued cost cutting has helped to compensate for any impact on profits.
 
“We currently list Royal Mail as a ‘hold’ as growing competition and current pressures on profit margins remain a concern, however longer term attractions continue for a balanced portfolio.”