Royal Mail Group PLC (LON:RMG) has restarted dividend payments as the surge in parcel deliveries during COVID-19 lockdown periods sent sales and profits soaring.
Profits leapt four-fold to £726mln in the year to end-March 2021 as revenues climbed by 16.6% to £12.6bn.
For the first time in its five-century history parcels accounted for the majority of revenue, said the postal group, adding the revenue windfall had given it the “breathing space to transform”.
“Instead of the feared trajectory into material losses, the changing customer behaviours during the course of the pandemic have provided top-line growth and profitability in 2020-21.”
Royal Mail said parcels revenue jumped by 38.7% over the year, which offset a 12.5% decline in letters, while overseas arm GLS increased volumes and saw margins jump by 8.9%.
April has seen some tailing off in parcels volumes with Royal Mail volumes down by 2% though there has been a resurgence in letter sending. GLS also slowed down from the middle of the month.
Because of the improved financial position, which saw £762mln cash generated over the year, the board said they decided to pay a 10p final dividend for the year.
Going forward it will also adopt a progressive policy, with a payment of 20p to be made in the current year to March 2022.
The company added it will not retain excess capital, implying special dividends or share buybacks if business continues to be good.
The COVID-19 backdrop means it is still too difficult to give specific guidance for Royal Mail, but GLS is performing in line with guidance said the statement.