Royal Mail has today raised its full-year revenue outlook, as it benefited from a surge in online shopping during coronavirus lockdowns, sending its shares up sharply.
The company's updated scenario for the current fiscal year estimates that revenue will be £380-580m higher year-on-year and that its main UK operation could break even if it hits the top end of that forecast.
Shares in Royal Mail, Britain's state-owned postal monopoly until its privatisation in 2013, climbed 7%, a near two-year high.
The company, in the midst of a long-running battle with unions over restructuring plans, in September had forecast revenues could rise £75-150m in the year to March 2021, assuming no further UK lockdowns.
Royal Mail has announced plans to hire 33,000 extra workers ahead of the traditional Christmas parcels and cards boom.
But it said today that tight new restrictions imposed across the country until at least the start of December left doubts over how the period would pan out for the business.
"Whilst the Covid-19 pandemic continues to present challenges for both Royal Mail in the UK and GLS (international parcels business), the first-half performance has been above our initial expectations in many areas," its interim executive chairman Keith Williams said in a statement.
Royal Mail, balancing declining letter deliveries with surging parcels, said costs related to Covid-19, the increased parcel volumes and restructuring led to an adjusted operating loss of £129m in the UK.
Royal Mail's pre-tax profit dropped to £17m for the six months ended September 27 from £173m a year earlier.
Revenue jumped nearly 10% to £5.67 billion as parcel volumes rose 33%, driven by the increase in e-commerce activity.
Its first-half operating loss of £129m compared with a profit of £75m a year earlier, as Royal Mail faced £85m in Covid-19 costs and £147m for voluntary redundancies.
Royal Mail said the letters business alone lost £180m, with revenues for the first time ever falling below those for parcels.