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PREVIEW: Royal Mail tipped to deliver the goods

Last updated: 06:30 19 May 2016 BST, First published: 15:51 18 May 2016 BST

RMK235(MR)-(1)

Investors expect Royal Mail PLC (LON:RMG) to deliver the goods when it reports full-year results on Thursday.

The former state-owned mail and parcel service  is tipped to meet the guidance and outlook it gave at the beginning of this year.

At the end of 2014, consensus projections for revenue and pre-tax profit for the year to the end of March 2015 were for £9.5bn and £447mln.

These numbers have come down quite substantially, with expectations now for revenues of £9.2bn and pre-tax profits of £410mln, said CMC Markets.

Its letter business is declining and the parcel operation is facing competition from the likes of UK Mail Group PLC (LON:UKM), FedEx Corporation (NYSE:FDX), United Parcel Service, Inc. (NYSE:UPS) and Amazon.com, Inc. (NASDAQ:AMZN).

CMC said in a note: "Chief executive Moya Greene is going to have to come up with a special delivery of an optimistic outlook and better-than-expected profits to sustain a share price which looks tilted somewhat towards the high side."

Elsewhere, soft drink group Britvic Plc (LON:BVIC) may update on any potential impact on its business of the government's new sugar tax when it reports half-year results.

Shares in the producer of Robinson's squash and J20 dropped along with those of rivals when Chancellor George Osborne announced the levy in March.

Numis Securities sees the company reporting a 1.8% drop in sales to £638.3m due to difficult markets.

But the broker expects pre-tax earnings before interest and amortisation (EBITA) to rise 6.3% to £68.8mln, helped by lower costs and favourable currency movements.

Numis says the results are likely to be weighted towards the second half, with demand for soft drinks rising in the summer, although matching last year should be easier due to the bad summer weather in 2015.

It also expects the group to update on new products such as multi-packs of Fruit Shoot in the US, a part of the overall US kids' soft drink market worth US$2bn.

The broker's Charles Pick said: "EBITA guidance was set at £180mln-190mln versus last FY’s £171.6mln when the finals were reported on November 25, with this range reiterated in the first quarter update on January 27. We expect a further reiteration."

Other companies expected to report include: 

Royal Mail PLC (LON:RMG), National Grid PLC (LON:NG.),  Mothercare plc (LON:MTC), Thomas Cook Group PLC (LON:TCG),  Mitchells & Butlers PLC (LON:MAB), Britvic PLC (LON:BVIC), Hargreaves Lansdown PLC (LON: HL.), Merlin Entertainments PLC (LON:MERL).

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