Royal Mail Group has booked an H1 pretax profit form continuing operations of £110m, from a year-earlier profit of £116m. Interim dividend was 7.4p a share, from 7.0p.
CEO Moya Greene said the performance was broadly in line with the company's own expectations.
"Group revenue increased by one per cent on an underlying basis, driven by a good performance from GLS, our continental European parcels business.
"We delivered UK parcel volume and revenue growth including new contract wins. Addressed letter volume decline was within our forecast range. The recent acquisition of ASM in Spain and GSO in California supports GLS' strategy of targeted and focused geographic expansion.
"We have increased our cost avoidance target from £500 million to £600 million of annualised costs cumulative over the three financial years ending 2017-18.
"We are targeting to reduce underlying UKPIL operating costs before transformation by up to one per cent in 2016-17, depending on the absorbable rate of change within our organisation.
"We are past the peak of investment. Net cash investment is expected to be no more than £500 million per annum, compared with an average of £615 million over the past three years.
"As always, our performance for the full year will be dependent on the important Christmas period. Extensive planning, which began in the spring, will help us to manage our busiest time. This includes the recruitment of over 19,000 temporary staff and opening nine temporary parcel sort centres."
- The key drivers for the UK letters and parcels markets remain unchanged. Letter volumes, particularly advertising letter volumes, are linked to movements in GDP and we are monitoring developments in the UK economy closely.
- We are now targeting to avoid around £225 million of UKPIL operating costs in 2016-17 and around £600 million of annualised operating costs cumulative over the three financial years ending 2017-18.
- We are now targeting to reduce underlying UKPIL operating costs before transformation costs by up to one per cent in 2016-17. The outcome of our cost performance will be dependent on the absorbable rate of change within our organisation.
- Transformation costs are now expected to be between £130-160 million for 2016-17.
- GLS will remain a focus for investment to help drive growth.
- We are reprofiling our investment spend, which will be lower overall and weighted to growth. We now expect net cash investment to be no more than £500 million per annum going forward, compared with an average over the last three financial years of £615 million.
- We remain very focused on improving our products and services, controlling costs, improving the efficiency of our spending and investing in new areas to support growth. The outcome for the full year will be dependent on the important Christmas period.
At 9:24am: (LON:RMG) Royal Mail Plc share price was -24.7p at 474.2p