Royal Mail: why are shares surging after profits fall?

[TrueBlueTerrier]

http://www.theweek.co.uk/royal-mail/555 ... ofits-fall" onclick="window.open(this.href);return false;?

Royal Mail shares surged to a three-month high this morning, rising by more than five per cent to 478p, despite its half-year profits falling sharply.

In its interim results announcement this morning, its first as a fully private company since the government sold the remainder of its stake earlier this year, Royal Mail revealed underlying pre-tax profits fell 16 per cent from £280m to £247m compared to the first half of 2014. Revenues remained broadly flat at £4.4bn.

But investors focused on resilience in earnings, which would have been roughly the same year on year were it not for £47m in costs related to Royal Mail's ongoing restructuring, the BBC reports. Operating profits fell by just two per cent to £342m, well ahead of analyst expectations. The half-year dividend was subsequently increased from 6.7p per share to 7p.

In terms of the underlying trend, the shift from addressed letters to a parcels market that Reuters says is being "buoyed by a boom in online shopping" is continuing. A four per cent fall in the former was offset by a similar rise in the latter – and the European parcels business grew by eight per cent. Royal Mail will hope to boost its parcels earnings following the purchase of London-focused same-day delivery service eCourier, announced yesterday.

Of arguably even greater significance was Royal Mail's revelation that it is accelerating its modernisation programme, which the Daily Telegraph says will result in the cutting of 3,000 more jobs. This is being welcomed as a positive by analysts who do not see potential for substantial revenue growth in the near future.

The fly in the ointment, barely mentioned in the report, is the ongoing Ofcom probe into the regulation of Royal Mail, which retains an obligation to conduct national deliveries and charges third parties to use its network.

After the company was accused of unfair treatment in the charges it set – and then abandoned – in 2014, there are fears the probe could change the way it prices services, which would affect its ability to offset declines in some areas of its business.

[pj2001]

That's why......

http://www.ibtimes.co.uk/royal-mail-pro ... ne-1529466" onclick="window.open(this.href);return false;

3000 jobs to go a massive saving on RM expenditure = happy share holders

[beezet]

[quote="pj2001"]That's why......

http://www.ibtimes.co.uk/royal-mail-pro ... ne-1529466" onclick="window.open(this.href);return false;

3000 jobs to go a massive saving on RM expenditure = happy share holders [/quote

Who is going to deliver the mail Well i might get evr now