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Britain’s Royal Mail said today it would return £400m to shareholders after the postal company forecast higher annual earnings in its UK business following a strong first half.
The company, one of the world’s oldest postal firms, was able to turn a corner since the pandemic began as more people shopped online, boosting its parcel delivery business.
However, analysts have warned that cost inflation could hurt Royal Mail’s margins.
“We’re seeing the benefits of our programmes to reduce costs, and are developing our plans to address inflationary pressures which will impact next year and beyond,” Royal Mail’s chief executive Simon Thompson said.
Royal Mail reported a surge in group adjusted operating profit to £404m for the six months ended September 26 and forecast full-year profit for its UK business of about £500m.
The company said it will buy back shares worth £200m starting immediately, while the remaining £200m will be paid as a special dividend.
Royal Mail plans to move towards a net zero cash position over the next two years.
