July 31, 2014

RMG share price tumbles 10 percent on parcel fears

RMG’s share price tumbled by 9.74pc on Thursday to close at 519p following its full-year results. Royal Mail posted impressive looking figures, but the underlying mechanics have spooked investors with concerns over future growth.

Royal Mail reported a 12pc increase in profits, with parcels up 7pc and letter volumes falling by 2pc rather than the expected 4pc.

However, while parcel revenues increased, the number of parcels by volume remained relatively static year-on-year which produced cause for concern.

The company also warned that it faced intense competition which could put downward pressure on its margins in the future.

The parcels delivery sector is RMG’s key growth sector as the volume of letters continues to undergo a uniform decline.

 

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