Shareholders receive a £400 million payout from Royal Mail. » Brinkwire

Royal Mail pays out £400 million in dividends to shareholders.

Because of the continued growth in online shopping, Royal Mail has given its shareholders an early Christmas present in the form of a £400 million payout.

It reported a 7.1 percent increase in revenues to £6.1 billion in its interim results, with pretax profits jumping from £17 million to £315 million.

Its profits increased as parcel volumes increased and Covid-19 and restructuring costs decreased.

It paid a half-year dividend of 6.7 pence per share, totaling £67 million to shareholders.

The pandemic, according to Royal Mail, has resulted in higher parcel volumes for the foreseeable future.

Domestic volumes had increased 33% year over year in the six months to September 26, while international parcel volumes had increased 30%.

Royal Mail announced that, as a result of its improved fortunes, it will pay a one-time special dividend of £200 million to shareholders, as well as spend another £200 million on buying back its own shares to boost the value of those still in circulation.

With parcel volumes steadily increasing and letters in long-term structural decline as a result of technology and the pandemic, Royal Mail CEO Simon Thompson said the company would increasingly focus on parcels.

“The pandemic has caused a structural shift and has accelerated the trends we’ve seen,” he said.

“Domestic parcel volumes, excluding international, have increased by about a third since the pandemic, whereas addressed letter volumes, excluding elections, have decreased by about a fifth.”

“This reaffirms that our strategy of rebalancing our offering to include more parcels is the correct one.”

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Although the pandemic’s initial effect on parcel deliveries is subsiding, Royal Mail’s gains appear to be sustainable, according to Richard Hunter, head of markets at brokerage Interactive Investor.

“Royal Mail has been another beneficiary of the pandemic’s forced strategic acceleration,” he continued.

“As it continues to transform, it is deftly spinning a number of plates.”

The stock’s price has risen by 55 percent in the last year, compared to 14 percent for the FTSE 100 as a whole.”