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Royal Mail profit warning

02 Oct 2018, 08:13

https://www.bbc.co.uk/news/business-45712060


Royal Mail shares ended 18% lower on Monday after it warned on profits in an unscheduled trading update.

The post and parcel firm said cost savings would be just £100m this year rather than the £230m forecast.

Addressed letter volume fell by 7% in the first half of the year, while productivity performance was "significantly below plan".

Adjusted operating profit before transformation costs would be between £500m and £550m as a result.

That is significantly lower than the £694m posted last year.

Shares fell 85.7p to 391.4p after the trading update was issued an hour before the London market closed.

Chief executive Rico Back trading conditions in the UK were "challenging", with the number of letters posted - particularly marketing mail - affected by "ongoing structural decline, business uncertainty and GDPR".

In June, Royal Mail said there was some uncertainty among its customers about the General Data Protection Regulation (GDPR), which imposes new requirements on how companies collect and process personal information about EU citizens and came into force on 25 May.

The company said its UK productivity growth had been disappointing, rising just 0.1% - far below the 2% to 3% target - despite no strikes being held by workers during the six months to 23 September.

However, Mr Back said the UK parcels business was performing well with revenue and volume up 6% in the first half.

"We remain focused on delivering parcel revenue growth and pursuing our strategy of targeted and focused acquisitions, through GLS, in growing markets," he said.

GLS is one of Europe's largest parcel delivery firms, covering 41 countries as well as eight states in the Western US and in Canada.

Helal Miah, an analyst at The Share Centre, said the recently appointed Mr Back appeared to be "throwing out the 'baby with the bath water' so he can begin his tenure with a clean slate".

Neil Wilson at Markets.com said it was a "really horrible profits warning", but described the fall in the shares that wiped £1bn off Royal Mail's value as "excessive".

Royal Mail post warning on profits and costs sending shares tumbling

02 Oct 2018, 08:47

And still dropping.

Royal Mail post warning on profits and costs sending shares tumbling

02 Oct 2018, 10:05

It hasn't helped that analysts at Liberum have put out a "sell" note, cutting the price target to 250p. The price is currently 367p.
Now even lower!

oh crap, job cuts

02 Oct 2018, 10:23

think i'll hang on to my shares until after christmas

Royal Mail post warning on profits and costs sending shares tumbling

02 Oct 2018, 10:34

Don't panick ,it may be an opinion but I find the fact that releasing a profit warning only a week to go before 10% of the business can be sold by us very suspicious, the big Investors will snap up the shares when they are so cheap, and watch them rise after a bumper Christmas. The job has never been so busy.

Royal Mail post warning on profits and costs sending shares tumbling

02 Oct 2018, 11:10

Its prettt obvious that this announcement is purley to send the share price plummeting just one week before us lot can sell them tax free. This is pretty disgusting from RMG. Remember the 'Share In Sucess'scheme from a few years ago? Look what happened there

oh crap, job cuts

02 Oct 2018, 11:12

Think it’s about time they cut number of DOMS so that it’s is one Dom for say every 4 offices after all what do they really have to do,not a lot. Our DOM :wave does less hours than the part timers and gets paid £40k plus a year. :wave :wave

oh crap, job cuts

02 Oct 2018, 11:18

Most doms& Lino's home for 11 am on Saturday and start same time as us.
Make them work there hours or chop most down to part time the doms,
Lino just don't need get rid off them all.

oh crap, job cuts

02 Oct 2018, 11:32

Why the panic - only shares which most of us got for free anyway !!

The share price is like house prices or football transfers - mostly made up pie in the sky guesswork.

Royal Mail is going nowhere - pretty much business as usual.

oh crap, job cuts

02 Oct 2018, 11:49

dandydon wrote:Why the panic - only shares which most of us got for free anyway !!

The share price is like house prices or football transfers - mostly made up pie in the sky guesswork.

Royal Mail is going nowhere - pretty much business as usual.

I wouldn't take that for granted. We're not govt owned now. If profits are down cutbacks WILL be made.

Royal Mail post warning on profits and costs sending shares tumbling

02 Oct 2018, 12:32

Hi all,

I am a journalist at the Financial Times and I cover Royal Mail.

I am looking to speak with any employees who were holding onto their shares with the intent of selling them tax-free once the five-year period had expired (i.e. in the next couple of weeks).

Please let me know if you're available to speak today, and I will give you a call.

Thanks,

Michael Pooler (industry reporter at the Financial Times)

Royal Mail post warning on profits and costs sending shares tumbling

02 Oct 2018, 16:25

We have a clause in our term of employment that prevents us talking to the press if I recall correctly.

Royal Mail post warning on profits and costs sending shares tumbling

02 Oct 2018, 18:07

Why would you want to? The FT long ago lost it's reputation for fair and impartial reporting.
What's the headline going to be? "Thousands of posties are p*ssed off" complete with a little pic of some glum-looking postie leaning on his van?
Might as well talk to the S*n.

Royal Mail post warning on profits and costs sending shares tumbling

02 Oct 2018, 19:17

THE CITY =GREEDY B......S. WHEN 500MILLION IS NOT ENOUGH. THEY WANT YOU TO LOSE YOUR JOB SO THEY. AN BUY ANOTHER BUNCH OF FLATS WHO THEY RENT OUT TO WELFARE TENANTS WHOM YOU PAY THEIR RENT THROUGH YOUR TAX ALL THE WHILE THEY DON'T PAY ANYTHING AS THEY MOSTLY CLAIM NO DOM STATUS ( 67 DAYS OR LESS PER YEAR STAYING IN UK). YOU COULDN'T MAKE IT UP BUT IT'S TRUE. :arrrghhh

oh crap, job cuts

02 Oct 2018, 20:05

number one wrote:£500m profit and people are panicking? Is that correct?


yes they are as Royal Mail is now ex growth. Profits could easily tumble much much further and this is why the shares have been smashed down.

Royal Mail post warning on profits and costs sending shares tumbling

04 Oct 2018, 11:52

What I find offensive is the guys at the top blaming declining mail volumes and industrial action threats on the profits. Umm...no it might be the fact £10million or so of packets went missing last year (now you're firing the investigations team so no f**ks given), paying Moya a fatcat leaving present and her full pension, paying the new CEO a fatcat welcome, being fined for providing a s**t service. There's even stories of post boxes getting nicked down South and Royal Mail can't even be bothered replacing them. Absolute clowns in charge.

Royal Mail post warning on profits and costs sending shares tumbling

04 Oct 2018, 16:45

lala wrote:Anyone who has requested their shares to be sold are going to be a bit grumpy!

I sure am. I knew the share price could fluctuate, but I didn't expect it to be because of my own chief executive.

Royal Mail post warning on profits and costs sending shares tumbling

04 Oct 2018, 20:33

needadvice wrote:Its prettt obvious that this announcement is purley to send the share price plummeting just one week before us lot can sell them tax free. This is pretty disgusting from RMG. Remember the 'Share In Sucess'scheme from a few years ago? Look what happened there


Do you really think it's being done to spite you personally?

The warning had to come soon. Like this at least the price has a bit of time to recover. If the cut in expected profits announcement came the day before the 5-year sale it'd have been so much worse for you.

Some people need to stop thinking it's been done specifically to target posties.

Royal Mail post warning on profits and costs sending shares tumbling

04 Oct 2018, 20:36

stephen500 wrote:
lala wrote:Anyone who has requested their shares to be sold are going to be a bit grumpy!

I sure am. I knew the share price could fluctuate, but I didn't expect it to be because of my own chief executive.


If you were happy with the sale procedure stating that your shares would be sold at a discount on market price of at least 5% and potentially 20%+ and chose to sell knowing you wouldn't be getting full price for them then you can hardly complain.

Royal Mail post warning on profits and costs sending shares tumbling

04 Oct 2018, 20:54

swindonandy wrote:
stephen500 wrote:
lala wrote:Anyone who has requested their shares to be sold are going to be a bit grumpy!

I sure am. I knew the share price could fluctuate, but I didn't expect it to be because of my own chief executive.


If you were happy with the sale procedure stating that your shares would be sold at a discount on market price of at least 5% and potentially 20%+ and chose to sell knowing you wouldn't be getting full price for them then you can hardly complain.


I think those of us who chose to sell had obviously been okay with the potential discount rate at the current share price. It's just the fact that the potential 20% reduction could still apply, only from a much lower starting point!

I understand the point though, there's innumerable risks when shares are involved and they were free in the first place. Its just a pretty bitter pill to swallow and morale amongst posties isn't exactly high as it is.

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