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Is Royal Mail Worth Your Time And Money?

30 May 2018, 13:12

https://seekingalpha.com/article/417773 ... time-money

Summary
More than one third drop in annual profit and a gloomy forecast.

YoY revenue growth only 2%.

YoY UKPIL revenue remained flat; GLS grew by 10%, dampened by decline in letters’ revenue.

Strongbalance sheet and a consistent dividend policy matched against a dwindlingcorrespondence market and fiercely competitive parcels market.

Age old correspondence methods are changing and so are conventions. And Royal Mail Plc (OTCPK:ROYMF) may not seem royal any more, as shrinking margins in the paper correspondence industry have pushed the company to revamp its business model. It is stressing more on parcels’ delivery with the boom of the e-commerce industry. With more than one third drop in annual profit and a gloomy forecast Royal Mail is all set to disappoint you.

Though the business got into the £10 billion revenue bracket for the first time, YoY revenue growth was only 2%. We may let go of the letters’ revenue but the other divisions also did not fare that well. The company operates through two core divisions: UK Parcels, International and Letters (UKPIL), and its European subsidiary General Logistics Systems (GLS). UKPIL in the UK collects and delivers parcels and letters through the Royal Mail Core Network and Parcelforce. GLS operates in continental Europe and the Republic of Ireland and has a large parcel delivery network in Europe. While YoY UKPIL revenue remained flat GLS grew by 10%, and contributed to almost 30% of overall profit. But that was quickly dampened by the decline in letters’ revenue owing to the new GDPR. Overall adjusted profit grew 1% only. While GLS is good and letters is drowning UKPIL remains at a tight position with shrinking revenues. The company has been successful in avoiding costs above target and continues to do so. Along with that there are strategic innovations in automation and AI that are being taken up to reduce costs and increase efficiency going forward.

The GLS is the best business Royal Mail has got as of now, seeing a YoY volume growth of 9%. GLS operates the second largest national express parcel network, thanks to the acquisitions of ASM and Redyser. The U.K. parcels’ market is very competitive with excess capacity which is putting pressure on prices. Though the company says they have been taking measures to expand margins, results show otherwise. The company expects UKPIL parcel volume and revenues will remain the same in the coming fiscal. And I bet that is not much. 20% of parcel revenues are coming through the international channel. It’s again a very competitive market with higher average unit rates. Royal Mail anticipates increasing capacity but it should depend on margins growth and exchange rate movements on trade flows.

Is Royal Mail Worth Your Time And Money?

01 Jun 2018, 16:56

Please get your facts right! The GDPR was introduced after the end of the financial year so it had no effect or relevance on any drop in letter volumes for the 2017-2018 tax year. It may or may not have any effect in the future. I suspect the latter will be the case.
On the subject of excess capacity there may be some in our competitors operations but there is none in RM. During Xmas 2017 RM really struggled to get everything delivered and a lot of the cards were delivered well after Xmas.

Is Royal Mail Worth Your Time And Money?

01 Jun 2018, 19:48

And yet RM can find 6 million to give to a ceo whom nobody has heard of, but we can struggle on making more money for him.
Last edited by TrueBlueTerrier on 02 Jun 2018, 11:12, edited 1 time in total.
Reason: It is fair to say that those in the 'top jobs' come in for a lot of criticism on this forum, please post constructive criticism and nothing else. Any libellous or slanderous posts will be deleted or amended, in no way should these personalities have any a

Is Royal Mail Worth Your Time And Money?

02 Jun 2018, 11:17

borgpicard wrote:And yet RM can find 6 million to give to a ceo whom nobody has heard of, but we can struggle on making more money for him.


Abusive term removed. Please don't break the rules this way again unless you seriously are trying to get RoyalMailChat taken down, and using the word you did, and without me taking action it could be

The rules on RMC aren't to stop people swearing at adults, its to protect the existence of the site for everyone and to not allow the actions of one person destroy the resource and good advice this site is known for.

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