Royal Mail shares are a ‘hold’ given the challenging market backdrop

Otmane El Rhazi from Mindful Money » Shares.

As Royal Mail reports its full year results, Graham Spooner, investment research analyst at The Share Centre, explains what they mean for investors… 

In its full year results reported this morning, Royal Mail revealed recent trading had been in line with expectations, amidst challenging conditions. Despite the group posting a 9% fall in operating profit to £611m, these results were broadly in line with expectations.

Royal Mail has said that a continued focus on efficiency has resulted in better than expected cost performance in the UK. Additionally, the group said a large number of innovations are now in place helping transform the business. Investors should note that although there are positives to be taken from this update, the group is still finding its trading environment challenging and it remains cautious on the outlook.

Despite cautions, the group does have a steady cash flow and a proposed full-year dividend of 21.0 pence, up from 20.0 pence last year, which may please investors. With these results in mind, we currently recommend Royal Mail as a ‘hold’ for medium risk investors looking to achieve a balanced portfolio.