Royal Mail lifts FY pretax profit, revenue, dividend

Royal Mail Group has lifted its FY pretax profit, revenue and dividend, and said it is responding to a challenging operating environment.

"We have made good progress against all of our strategic priorities. This has been a more challenging period for UK businesses and we have come through it well," said CEO Moya Greene.

"Our multi-year focus on costs is a key priority. We are on track to avoid around £600m of annualised costs in UKPIL by 2017-18," she said.

Greene added that Royal Mail was past the peak of investment and now expect net cash investment of about £450m in 2017-18.

"GLS is performing very well and is growing revenue organically and through acquisitions," said the CEO.

"Its deep expertise and focus on B2B parcels in multiple geographies - now 41 European countries and seven states in the US - positions it to be a greater force for growth for the company. We will continue to invest in careful and focused international expansion by GLS," she said.

"Through a combination of our strategic approach to costs and more efficient investment spend, we will support our progressive dividend policy with the in-year trading cash generation of the Group."

Revenue for the FY was £9.78bn, from £9.25bn, while pretax profit rose to £335m, from £267m. Proposed FY dividend was 23p a share, up from 22.1p.

OUTLOOK SUMMARY

- Responding to challenging operating environment and continuing to focus on sustainable cash generation.

- Expect to keep in step with addressable UK parcels market3 growth of around three per cent due to IT-enabled improvements.

- Maintain outlook for addressed letter volume decline of between four to six per cent per annum (excluding the impact of political parties' election mailings) - expect to be at higher end of range of decline in 2017-18 if business uncertainty persists.

- Continue to invest in GLS' careful and focused international expansion to help drive growth for the Group.

- Remain on track to avoid around £600 million of annualised operating costs in UKPIL by 2017-18.

- Expect net cash investment of around £450 million in 2017-18 and less than £500 million per annum going forward.

- Progressive dividend policy supported by in-year trading cash flow generation of the Group.