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Royal Mail relieved as busy Christmas period boosts results

22nd January 2015 Print

As Royal Mail updates the market, Graham Spooner, investment research analyst at The Share Centre, explains what it means for investors.

“In a trading update this morning, Royal Mail reported a 1% increase in revenue growth for the nine months ending 28 December. The company said its UK parcel and letter delivery business, worth half of group sales, saw a strong Christmas with a 4% increase in the month of December. This is reassuring for investors as a weaker Christmas period would have put pressure on its full year forecasts, instead the guidance for the year remains unchanged. Additionally, the group’s international parcel business delivered an 8% rise in revenue.

“We recommend Royal Mail as a ‘hold’ for medium risk investors. Given its performance over the Christmas period, the company is confident that it will meet its full year profit expectations. However, whilst the group continues to focus on costs, investors should be aware that competition from the likes of Amazon continues to put a squeeze on revenue growth.”