• Market Loop
  • Posts
  • Today's business and finance round up 21st May 2021

Today's business and finance round up 21st May 2021

Today's issue - 📦Royal Mail delivers bumper profits

21st May 2021

Good morning  Today marks exactly one month until 21st June when all lockdown restrictions are (hopefully!) due to lift. So that means one month to plan outfits for those epic “freedom day” parties!Today is also the last day to use the "forward to friend" link below to be in with a chance of winning £30 restaurant vouchers (more details here). 

Forward to Friend

Today's stories

  • Royal Mail delivers bumper profits

  • Trainline shares tanked by rail shake up

Yesterday's market moves

FTSE 100   +1.0%   6,977 FTSE 250   +0.7%    22,323

Markets were higher as investors brushed off inflation concerns of the past week and became more optimistic over the re-opening of economies. The FTSE 100 closed up 1.0%, while the FTSE 250 was 0.7% higher.

Royal Mail delivers bumper profits

What’s going on

Royal Mail quadrupled profits to £762m in the year to March 2021 fuelled by the boom in online shopping during the pandemic.

Why is this important

During lockdown ecommerce has surged and delivery companies like Royal Mail have been among the big beneficiaries. Revenues increased 17% to £12.6bn driven by a 39% rise in parcel trade.

Parcels, rather than letters, provided Royal Mail with the majority of its revenue for the first time in its 500 year history. 

The strong performance means that it will also pay its first dividend in over year, 10p a share that it will double next year.

However, the company warned that parcel volumes in the UK were down 2% last month compared to April 2020 when the first UK lockdown was in full swing. Perhaps a sign that shopping has shifted offline as non essential retail reopened.

Takeaway

Royal Mail’s results mark a real reversal of fortunes. Before the pandemic, its efforts to modernise under former CEO floundered against union opposition and this was reflected in the share price.

In the past year the share price has increased by over 300% and is a strong contender to enter the FTSE 100 at the reshuffle next month.

Trainline shares tanked by rail shake up

Fair to say that 2020 was a tough year for Trainline, the online and mobile app for train tickets and travel cards. Earlier this month they reported that passenger numbers for the past year were just 5% of the year before.

There were signs of light at the end of the tunnel with travel increasing as lockdown restrictions started to lift this year. 

That was, however, until yesterday when the government outlined plans to simplify its railway-franchise system. 

The government said it will restructure the country's train networks through the creation of Great British Railways (GBR), a publicly-owned body that will be in charge of ticketing and timetables.

Unlike the National Rail website, which redirects customers to individual rail companies to buy tickets, the new GBR system will allow passengers to book all trips from one site.

Trainline sells about 70% of all digital tickets so the launch of GBR poses a serious threat to the business and as a result their shares fell 23% yesterday. 

Trainline have taken the glass half full stance. In a statement Trainline said they were supportive of the plans and could use their expertise to work with the government.

Covid-19 Vaccine Update

  • In the past 24 hours 265k UK adults have had their first dose and 369k have had the second dose.

  • This means 70.7% of UK adults have had at least one dose of a vaccine, 40.3% of adults have had two doses.

Other stories to keep you in the loop

Stat of the day

Oprah Winfrey, Natalie Portman and Jay-Z are among the celebrity backers of plant based milk company Oatly that raised $1.4bn on its stock market debut yesterday