Royal Mail recommended as a ‘hold’ due to parcel delivery battle

As Royal Mail reports its half year results Graham Spooner, investment research analyst at The Share Centre, explains what it means for investors.

“Royal Mail announced this morning a fall in its first half profits, however results were not as bad as feared. The group also warned that increasing competition from online retailer Amazon, amongst others, will hit its parcel delivery operations and will continue to pose a threat in the future. Despite this, management said that the company’s performance remains in line with expectations, although its full year results will depend on its performance over the Christmas period.

“We recommend Royal Mail as a ‘hold’ for income seeking investors. Potential longer term attractions remain and management has been improving performance and cutting costs. However, the market is focused on the threat of competition and falling volumes, so for the time being we suggest potential investors watch the situation from the side lines.”