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A tough year for Royal Mail shares - is there any room for optimism?

15 May 2019, 13:38

https://www.thearmchairtrader.com/royal-mail-shares-room-optimism/

A tough year for Royal Mail shares – is there any room for optimism?

Following a difficult 12 months for Royal Mail shares, investors will be looking for signs of encouragement within their full year results

After a complete disaster of a 2018, its bright first half proving to be a false dawn, Royal Mail shares have struggled in 2019, unable to attract investors to its cause.

Opening at £2.68, it had climbed above £3 by late-January, only to slump to a record low of £2.32 by the end of March.

A rebound back above £2.60 then proved to be short lived, with Royal Mail shares now at a current trading price of £2.40.

The tentative optimism that had helped drive the stock higher across much of January came crashing down following its New Year trading update, one that caused Royal Mail to shed almost 14% in a single session. Though underlying group revenue for the 9 months to December 23rd managed to inch up by 2%, with a 1% decline at UKPIL compensated for by the 8% increase at GLS – a now routine split – its outlook for this year and the next was pretty dreary.

Adjusted operating profit before transformation costs is now expected to come in between £500 million and £530 million, £20 million lower than its previously stated guidance, and a huge way-off last year’s £694 million. With the company continuing to feel the impact of GDPR, letter volumes are set to be down 7-8% for 2019, and ominously outside the ‘medium-term range’ next year in 2020.

The company might be able to provide a short-term stock price rescue if its adjusted operating profit at least arrives at the top end of estimates. But even then, something slightly more substantial is going to be required to prevent these record lows becoming its normal trading band.

A tough year for Royal Mail shares – is there any room for optimism?

15 May 2019, 14:16

postareale wrote:https://www.thearmchairtrader.com/royal-mail-shares-room-optimism/

A tough year for Royal Mail shares – is there any room for optimism?

Following a difficult 12 months for Royal Mail shares, investors will be looking for signs of encouragement within their full year results

After a complete disaster of a 2018, its bright first half proving to be a false dawn, Royal Mail shares have struggled in 2019, unable to attract investors to its cause.

Opening at £2.68, it had climbed above £3 by late-January, only to slump to a record low of £2.32 by the end of March.

A rebound back above £2.60 then proved to be short lived, with Royal Mail shares now at a current trading price of £2.40.

The tentative optimism that had helped drive the stock higher across much of January came crashing down following its New Year trading update, one that caused Royal Mail to shed almost 14% in a single session. Though underlying group revenue for the 9 months to December 23rd managed to inch up by 2%, with a 1% decline at UKPIL compensated for by the 8% increase at GLS – a now routine split – its outlook for this year and the next was pretty dreary.

Adjusted operating profit before transformation costs is now expected to come in between £500 million and £530 million, £20 million lower than its previously stated guidance, and a huge way-off last year’s £694 million. With the company continuing to feel the impact of GDPR, letter volumes are set to be down 7-8% for 2019, and ominously outside the ‘medium-term range’ next year in 2020.

The company might be able to provide a short-term stock price rescue if its adjusted operating profit at least arrives at the top end of estimates. But even then, something slightly more substantial is going to be required to prevent these record lows becoming its normal trading band.

Reason for optimism? No !

A tough year for Royal Mail shares – is there any room for optimism?

15 May 2019, 15:00

How do they get away with saying letter volumes are down 9%? That's just not true, surely.

A tough year for Royal Mail shares - is there any room for optimism?

15 May 2019, 18:15

Basically what Royal Mail are saying is "please invest in our declining letters business" Why would you?

A tough year for Royal Mail shares - is there any room for optimism?

15 May 2019, 23:02

Mail down my arse
Worked nearly 30 years in royalmail,
Went out with 2 bags if lucky 30 years ago and only 2-3 hours max on delivery,
Now go out with 8 bags and 4-5 hours on delivery some decline that.
Same lies every year
Get rid of line managers that do nothing, and cut bonus culture.
Will save millons on wage bill and share prices will rise.

A tough year for Royal Mail shares - is there any room for optimism?

17 May 2019, 07:57

that’s the problem since this new boss has come into Royal Mail things have got worse, it seems he doesn’t have a clue what to do, Parcels are increasing but letters have definitely declined in my area anyway, the problems seems to be over capacity in mail centres, delivery offices that are not run properly, managers that are useless & wouldn’t get a job anywhere else.

A tough year for Royal Mail shares - is there any room for optimism?

17 May 2019, 09:09

Yamr1 wrote:Mail down my arse
Worked nearly 30 years in royalmail,
Went out with 2 bags if lucky 30 years ago and only 2-3 hours max on delivery,
Now go out with 8 bags and 4-5 hours on delivery some decline that.
Same lies every year
Get rid of line managers that do nothing, and cut bonus culture.
Will save millons on wage bill and share prices will rise.

It's the letters and flats that have dropped in volume

A tough year for Royal Mail shares - is there any room for optimism?

17 May 2019, 20:10

How can RM be profitable when it's bound by the USO in the current form.

In due course RM will petition ofcom and ask for a reduction in the USO as the whole thing will be unsustainable in a minute.

Maybe the bosses knows this hence the drive to take large parcels off walks already.

A tough year for Royal Mail shares - is there any room for optimism?

18 May 2019, 14:02

SpacePhoenix wrote:
Yamr1 wrote:Mail down my arse
Worked nearly 30 years in royalmail,
Went out with 2 bags if lucky 30 years ago and only 2-3 hours max on delivery,
Now go out with 8 bags and 4-5 hours on delivery some decline that.
Same lies every year
Get rid of line managers that do nothing, and cut bonus culture.
Will save millons on wage bill and share prices will rise.

It's the letters and flats that have dropped in volume

More to the point stamped mail but DSA mail the mail RM lose money on has taken over by 80% of the revenue and bulk of the average post bag, packets and small packets is where the money is but has been said the management bonus culture has taken hold and is a major cost to the business and the morale of the hard working postmen/women.

A tough year for Royal Mail shares - is there any room for optimism?

21 May 2019, 00:20

I don't have any optimism that the share price will recover even to the original sale price let alone the lofty heights of six quid!!
I seriously regret buying RM shares rather than taking my money in the SAYE scheme and am thinking that money will eventually be written off as a loss. Possibly if the rumour that the German postal service are about to launch a bid to buy RM comes off then the share price may rise then. RM could and should be a thriving business but all they are concerned with is screwing over the workforce.

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