Royal Mail Hands £400 Million to Investors on Parcel Windfall

Christopher Jasper, Bloomberg News

An employee sorts through a trolley of parcels the Royal Mail Plc sorting office in Chelmsford, U.K., on Thursday, May 13, 2021. Royal Mail are due to report earnings on Thursday, May 20. Photographer: Chris Ratcliffe/Bloomberg , Bloomberg

(Bloomberg) --

Royal Mail Plc said it will return 400 million pounds ($540 million) to shareholders as it gains confidence the online shopping boom that has spurred parcel deliveries will persist.

The U.K. postal service will pay out half the money through a share buyback that will start immediately and the rest through a special dividend, it said in a statement Thursday.

“We now have more visibility on the strategic progress and performance,” Chairman Keith Williams said in the release. “While there is more to do, the board has decided that we should re-examine our retained cash balance.”

Royal Mail has been one of the biggest corporate beneficiaries of the coronavirus pandemic as lockdowns boosted web-based purchases and home deliveries, accelerating an emerging trend. The London-based company said the shift is structural, with its package volumes up by a third in the U.K. in the first half through September compared with the same period in 2019.

Operating profit surged in the half, with the company forecasting an adjusted figure of 500 million pounds for the full year.