(qlmbusinessnews.com via telegraph.co.uk – – Tue, 2nd Oct 2018) London, Uk – –
Royal Mail stocks plunged by a record 22.3pc after the postal service warned investors that full year profits would be lower than previously expected.
In a statement the company said that it expected operating profits before costs will be between £500m and £550m, down from a previous target of £652m.
Last year the company recorded an operating profit of £694m.
The announcement sparked a drop in Royal Mail's share price from 490.8p to a low of 381p, the company’s steepest
one-day decline since it debuted on the London Stock Exchange in 2013.
In its statement, Royal Mail said letter volume fell by 7pc in the first half and the company expects a similar decline for the full year.
Rico Black, the company's relatively new chief executive, said: “Trading conditions in the UK are challenging. Our letter volumes, especially marketing mail, are impacted by ongoing structural decline, business uncertainty and GDPR.
“While we now expect addressed letter volume declines outside our forecast range this year, we are maintaining our medium-term guidance.
“Our UK productivity and cost performance has been disappointing. Against this backdrop, we are lowering our targets for cost avoidance and productivity improvements for 2018-19.”
Mr Black said the company would remain focused on delivering parcel revenue growth and pursuing a strategy of targeted and focused acquisitions in growing markets.
The company is due to provide a further update on November 15, 2018.
Royal Mail's current CEO took the position in June this year, succeeding Moya Greene, who stood down after eight years in charge of the company.
Mr Black was previously head of Royal Mail's European business General Logistics Systems.
In July, the company suffered an extraordinary shareholder backlash as 70pc of its investors voted against its pay packets for senior executives.
The vote took place after it emerged that Mr Back would be paid a salary of £640,000, 16.8pc more than his predecessor.
Royal Mail’s share price has declined by more than a third since May this year when City analysts warned that the European Union's new General Data Protection Regulation (GDPR) laws were likely to hit letter volumes as confused companies scrambled to rein in their marketing mail.
Earlier this month, it was revealed that complaints made by consumers to Royal Mail topped a million this year as a rise in online shopping prompted a record number of “disappearing parcels”.
The number of complaints in which customers denied receiving parcels rose by 51pc to 134,712 over 12 months.
By Wil Crisp