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Royal Mail boss Back needs to find a rabbit as another dismal trading update sees the shares tanking again

29 Jan 2019, 15:56

https://www.independent.co.uk/news/busi ... 52181.html

Remember the fuss about the way Royal Mail was sold off on the cheap?

Taxpayers were estimated to have lost as much as £1bn after the shares were let go in 2013 at 330p a pop, valuing the company at £3.3bn.

On the first day of trading they jumped by 38 per cent, and were soon breaking through the 600p barrier. Those were heady days for the postal company and well done to you if you took part in the sale and got out at, or close to, that point. The return to earth has been painful indeed.


This morning saw the company further tightening its profits guidance. It still expects the floor to be £500m when it comes to the full year numbers, but the ceiling has been cut by £20m to £530m. Investors have already been treated to a ghastly profit in the last four months. When it rains it really does poor.

So what’s going on this time? That the internet is impacting letter volumes is well known but at least it’s doing so in a predictable manner. Unfortunately, CEO Rico Back also warned that the company is taking a further hit from “business uncertainty”. Most firms operating in the UK are battening down the hatches, and that includes their sending out less mail.


Back didn’t deign to mention the cause, but he scarcely needed to. It’s Brexit, the font from which all uncertainty currently springs.

There was a paragraph on that festering sore in the guts of the trading statement. It said that the company has been planning for all eventualities and is ready for the worst, at least in those areas it is able to control. That isn’t saying much given that most of the problems Brexit is going causes will be completely outside of the company’s control.

Still, the parcels business is growing nicely, so there’s that. Shame it’s not doing enough to offset the decline in letters, but there you go. Meanwhile, Back talked about protecting margins at GLS, the international gourd based parcel network that he used to run and that accounts for a quarter of revenues. Oh, and he’s trying to cut costs. CEOs under the cosh all like to say how determined they are to take action on that front.

The market’s verdict tells you all you need to know about how much faith investors have in all this. It was swift and brutal, with another 10 per cent lopped off the value of the company. It’s already facing up to life in the second tier FTSE 250 index having been demoted from a FTSE 100 it won’t rejoin for the foreseeable future.

That matters because you get less coverage from analysts down there, and it’s typically harder and more expensive to raise money should you need to.


Investors really are entitled to ask what they’re getting for all the money that was splurged on Back’s multi million pound golden hello, which went hand in hand with a golden goodbye for Moya Greene, his predecessor who was at the tiller when the business’s problems were gestating.


The two payments led to one of the biggest revolts over pay the City has seen and no wonder because “not much” seems to be the answer.

If Back has a rabbit somewhere, now would be a good time to produce it.

Royal Mail boss Back needs to find a rabbit as another dismal trading update sees the shares tanking again

29 Jan 2019, 16:04

The rabbit being , we are too big to fail , lets trash the USO and staffs terms and conditions.

Royal Mail boss Back needs to find a rabbit as another dismal trading update sees the shares tanking again

29 Jan 2019, 17:48

and the strike to come

Royal Mail boss Back needs to find a rabbit as another dismal trading update sees the shares tanking again

29 Jan 2019, 18:01

The update actually wasn't any worse or better than expected... this is the shorters hammering RMG.

Royal Mail boss Back needs to find a rabbit as another dismal trading update sees the shares tanking again

29 Jan 2019, 19:04

wacko74 wrote:The update actually wasn't any worse or better than expected... this is the shorters hammering RMG.


Yeh I agree, it was largely in line with what was expected. Does'nt seem to be a proportional reaction to the statement. Unusual.

Royal Mail boss Back needs to find a rabbit as another dismal trading update sees the shares tanking again

29 Jan 2019, 19:38

mickeymacca wrote:
wacko74 wrote:The update actually wasn't any worse or better than expected... this is the shorters hammering RMG.


Yeh I agree, it was largely in line with what was expected. Does'nt seem to be a proportional reaction to the statement. Unusual.


Not that unusual for RMG...Just about every trading statement we've issued since privatisation has resulted in a dip in the SP even when the results have been better than expected!

But as you say, this latest drop is massively over done... and I still say it's all down to the shorters acting like a pack of hyenas.
At some point they've got to close their positions, until then we'll just have to sit tight

Royal Mail boss Back needs to find a rabbit as another dismal trading update sees the shares tanking again

29 Jan 2019, 19:46

Just looked on the BBC site, RM shares down 13.27% today, down to £260.80

Royal Mail boss Back needs to find a rabbit as another dismal trading update sees the shares tanking again

29 Jan 2019, 20:21

Whatever Back does or doesn't do he's already got the same old excuses ready for any failure on his part...."Brexit mate innit".

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