Royal Mail’s share price may have dropped more than 5% in early trading, but we’d imagine Vince Cable, Moya Greene and pretty much anyone else involved in the flotation of Royal Mail heaved a big sigh of relief as it posted the Baby Bear of full year results: not too bad, but not too amazing either.
Annual operating profits rose 12% to £671m from £598m a year ago; sales rose 2% to £9.46bn from £9.15bn a year ago and parcel delivery volumes - now Royal Mail's favourite business - were flat (although its revenues rose 7%). Letter volumes dropped by 4%, although that was against expectations of a 6% drop. That's what we call encouragingly disappointing.
Business secretary Vince Cable is still in trouble over his part in the pricing of Royal Mail’s shares, which are perceived as having been under-valued when the group floated at 330p a share in October, then promptly rose 38%.
At the end of April he told an MP select committee that he would offer 'absolutely no apology', and that the rise was 'froth and speculation'. Although even after this morning’s fall, shares were still 543p – 60% up on their original flotation price…
Chief executive Moya Greene took care to be positive, but not too positive. 'Our performance was in line with expectations,' she affirmed, before pointing out that 'we are facing a couple of headwinds'.
Those include more competition on the parcels side (TNT has threatened to move into direct delivery, which could take a £200m chunk out of Royal Mail's revenues), as well as the ever-declining volume of letters.
To combat this, Royal Mail has suggested that it might start delivering parcels on Sundays. Even the privatisation's detractors have to admit that will be eminently convenient...