Royal Mail raises revenue view on online shopping boost; virus costs weigh

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FILE PHOTO: The logo of Royal Mail is seen outside the Mount Pleasant Sorting Office as a delivery vehicle arrives, in London, Britain, June 25, 2020. REUTERS/John Sibley

(Reuters) – Royal Mail (L:RMG) raised its full-year revenue forecast on Thursday as it gained from the surge in online shopping spurred by coronavirus lockdowns, while warning it was still struggling with the costs of social distancing and its loss-making letters business.

The company said it now expects revenue to be 380 million to 580 million pounds higher year-on-year and that its main UK operation could break even if it hit the top end of that forecast.

The company, Britain’s state-owned postal monopoly until its privatisation in 2013, said pre-tax profit dropped to 17 million pounds for the six months ended Sept. 27 from 173 million pounds a year earlier.

Revenue, however, jumped nearly 10% to 5.67 billion pounds as parcel volumes registered strong growth, driven by an increase in e-commerce activity.

“Whilst the COVID-19 pandemic continues to present challenges for both Royal Mail in the UK and GLS (international parcels business), the first-half performance has been above our initial expectations in many areas,” Interim Executive Chairman Keith Williams (NYSE:WMB) said in a statement.