Royal Mail (LON: RMG) has revealed the collapse of profits in the first half of 2020.
Pre-tax profit increased 90.2% to £17 million. However, the group remains positive, saying its expected full-year revenue could be between £380 million and £580 million higher than previously forecast.
If revenue is generated at the top of the expectations, Royal Mail is “better than being destroyed.”
The group also recorded a adjusted loss of £127 million after COVID-related costs and redundancy.
Despite the loss, the group reported a 51% increase in domestic parcels that do not include Amazon. The volume of parcels is increasing as shops close and people order more online.
“For the first time, Royal Mail’s Parcels revenues have been greater than letter revenues, which currently account for 60% of total revenue.
“The revenue performance of the scenario has improved as both Royal Mail and GLS parcels continue to be robust years.
“While it remains difficult to provide accurate guidance, there is more uncertainty in the third quarter about the trends in the fourth quarter, and the growth of the parcel is expected to be strong due to the development of the Covid-19 pandemic, the impact and trends of the international volume of further recession,” he added.
Commenting on the results, Michael Hewson of CMC Markets said: The business outlook is now much more positive as it has recently competed with Amazon on a one-year contract of £55,000 to provide 215,000 Covid-19 test kits per day in the UK. ”
Royal Mail shares (LON: RMG) are 7.13% +7.13% at 306,40 (0920GMT).
