 has received a £106 million boost in profits. Royal Mail's UK parcels){kind=link}
Following the decision to end their pension scheme, Royal Mail (LON:RMG) has received a £106 million boost in profits.
Royal Mail’s UK parcels and letters business, reported revenues of £3.6 billion, with operating profits falling by £12 million. The international arm of the branch posted “strong” growth – revenue swelled by nine percent to £1.2 billion.
Moya Greene, the chief executive, said that the results showed “a good start to the year”, adding that “our investment in our business is paying off”.
The now-privatised firm did recognise that the £106 million tax credit was linked “to the decision to close the [Royal Mail Pension Plan] RMPP to future accrual after 31 March 2018″.
Royal Mail is in talks with unions about the of suggested changes to working practices – this includes the closure of the impressive pension scheme for employees.
Shares rose more than four percent in early trading.
The company said it hopes to make considerable cost savings of around £190 million in its UK letters business. It has yet to give any detail on how it will achieve this.
“The outcome of our cost performance will be dependent on the absorbable rate of change within our organisation,” said the firm.
Analyst Neil Wilson from ETX Capital senior said: “More of the same from Royal Mail with good growth in parcels and GLS while letters are in freefall decline: yet more evidence of the structural problems it faces as it heads into the key Christmas trading period. Whilst letters weigh, parcels look solid, GLS is strong and the dividend yield certainly looks attractive,”
“As ever, it all hinges on Christmas but with like the rest of the letters market, Christmas cards are ex-growth. The rapid decline may have slowed as consumers realise Christmas emails are not all they’re cracked up to be and increasingly go upmarket, but broadly speaking this is about managing the decline in volumes.”