Royal Mail reports strong profit growth in 2014

Royal Mail has announced its financial results for the year ended March 29, 2015. It reported revenue of £9.42bn, a slight decline of 0.34% year-on-year. The company also recorded profit before tax of £569m, an increase of 35.15% year-on-year. Accordingly Royal Mail’s margin stood at 6.03%.

Moya Greene, Chief Executive Officer of Royal Mail said, “We have delivered operating profits in line with our expectations. Our continued focus on efficiency resulted in a better than expected UK cost performance, offsetting lower than anticipated UK parcel revenue. At the same time we have delivered a large number of innovations at pace as we transform our business.”

In spite of the top line decline the company stated that underlying revenue (adjusted for exchange rates, working days and one-off items) increased by 1% over 2013’s result. This was due to parcel revenue growth in UKPIL and revenue growth in GLS which was ahead of our expectations.

Profitability was improved by a number of factors. In UKPIL, operating costs before transformation costs were down 1%, better than expected. Tight cost control drove the operating profit margin and the company benefitted from £100m from the London property portfolio.

UKPIL revenue was flat at £7.76bn. A 1% decline in total letter revenue was offset by parcel revenue growth of 1%, reflecting the competitive market. UKPIL parcel volumes increased by 3%, with a better performance in the second half. Addressed letter volumes declined by 4%.

GLS revenue grew to £1.65bn, up 7%, with revenue growth in all its markets. Volumes were up 8%.