Royal Mail: shares higher after trading update.
(CercleFinance.com) - Britain's postal firm Royal Mail posted revenue up 1% in its first quarter, while saying that it will continue to focus on controlling costs.
Royal Mail said on Tuesday that parcel volumes grew 5% in the three months to 25 June, thanks to new contracts and more traffic from existing customers.
However, sent letter volumes still fell by 6%, excluding the impact of political parties' election mailings, with revenues down 4%.
Analysts at Liberum, who have a "sell" rating on the stock, with a target price of 385 pence, said the results were "mixed."
"We remain concerned that parcels growth is not fast enough to offset the decline in letters, with productivity facing headwinds from wage inflation and parcels workload," the broker said.
Royal Mail's European parcels arm, GLS, continued to perform strongly, with revenues up 6%.
The company also said that its "cost avoidance programme" was on track.
After these results, Royal Mail shares were up 3% at almost 410.6 pence this morning in London.
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