Royal Mail Posts Fall in Profit As EU Uncertainty Hits Junk Mail--Update
17 Novembre 2016 - 4:16PM
Dow Jones News
(Adds detail and analyst comment)
By Rory Gallivan
LONDON--Royal Mail PLC (RMG.LN) said Thursday that uncertainty
around the Brexit vote led to a fall in the volume of marketing
letters it handled as it reported a fall in interim profit.
Net profit for the 26 weeks ended Sept. 25 fell to 86 million
pounds ($106.6 million) from GBP114 million over the similar period
the previous year. Revenue rose to GBP4.58 billion from GBP4.4
billion as growing parcel volumes offset the continuing decline in
letters.
Royal Mail's profit had been boosted the previous year by
non-recurring income including a property disposal. Underlying
profit fell 5% from last year to GBP320 million.
The formerly state-owned U.K. postal service said revenue from
marketing mail was down 8% as companies held back on campaigns amid
uncertainty before and after the referendum to leave the European
Union on June 23.
Shares in Royal Mail were down nearly 10% in afternoon trading
at 449 pence, valuing the company at around GBP4.5 billion.
The company said it is now targeting savings of GBP600 million a
year over the three years ending 2017/18, up from its previous
target of GBP500 million.
"As always, our performance for the full year will be dependent
on the important Christmas period," said Chief Executive Moya
Greene.
Analysts at Jefferies said the deteriorating mail trends leave
the outlook for the year uncertain. They added that the company
faces further pressure from increased competition when Deutsche
Post DHL Group completes its GBP242.7 million takeover of Royal
Mail's smaller rival U.K. Mail Group PLC (UKM.LN).
Write to Rory Gallivan at rory.gallivan@wsj.com; Twitter:
@RoryGallivan
(END) Dow Jones Newswires
November 17, 2016 10:01 ET (15:01 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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