Royal Mail said it would pay a one off dividend and held full-year profits guidance as it outlined plans to more than double profits at its GLS parcels unit in the next five years.
The letter and parcels delivery company will pay shareholders 10p a share after reporting a rise in volumes earlier this month due to a surge in parcel deliveries from online shopping during the Covid pandemic.
Annual group adjusted operating profit is still expected to be around £700m, while GLS adjusted operating profit was forecast to be around £350m and adjusted operating profit margin 8.7%.
Ahead of an update on medium-term targets for the GLS business, the world’s oldest letter carrier on Tuesday said it would increase operating profits to 500m from 2019-20 – 2024-25, grow revenue at around 12% from 3.6bn in 2019-20) generate 1bn of free cash flow.
The board expects to announce a new dividend policy for the group with FY2020-21 results on May 20, the company added.
Royal Mail raised its annual profit forecast on March 10, citing stronger-than-expected advertising, business and stamped mail volumes this year.
In February it forecast annual profit ahead of market expectations as Covid-19 restrictions pushed parcel delivery demand to record levels and Christmas mail eased a slide in letter volumes.
