Concerns about increasing staff costs and also ever declining mail volumes have meant that the Royal Mail share price has reached its lowest point since privatisation.
Obviously the current wranglings and possible industrial action between Royal Mail and the CWU are of concern to analysts and investors. A report from Credit Suisse, in particular, sounds a note of concern.
The bank has changed its rating on the British postal service company from neutral to underperform, with a target price of 325p. Well below where it is now it.
They say: “We expect worsening letter revenue trends and a costly labour deal to render 2018 earnings unsustainable.” They predict a 3% pay rise deal costing £50m a year.
The bank also notes that there are two factors behind its dim outlook on letter revenues: big banks like RBS, Santander and also the UK government are taking even more steps to cut mail volumes they send to save money. Ever decreasing mail volumes will impact Royal Mail income. Secondly, “internet use is rising fast among adults over 65, reducing the need for letters”.
The ever present reality about Royal Mail, and why the dispute seems notably old-fashioned in some aspects is that Royal Mail desperately needs to develop services salient to the new ecommerce environment. And companies such as Amazon, and the new generation of courier companies, are striding ahead.
Whilst postal workers and the CWU (communications workers union, the body representing postal workers) fixate about whether the daily post delivery should be earlier in the day, other organisations are looking at evening deliveries, Sunday time slots and same-day options for consumers. There is scope for developing parcel collection, lockers and monetising services for shoppers’ convenience. As I’ve often noted that at my local sorting office, on only one day a week can I collect a missed delivery after 14:30.
Until some key new services and developments are introduced, the Royal Mail share price will continue to suffer.
9 Responses
It’s not the union that won’t pay for a postal worker to work into the evening so you can collect your parcels. It’s royal mail senior management. Postal workers would be fighting for that kind of over time. So who are the dinosaurs?
Yes but unlike Royal mail , most of these other delivery companies use low wage part time and self employed staff with the government picking up the tab in tax credits because their wages and conditions are so bullshit.
Should never privatised it
There are so many questions that require answers on this .
Are our postmen entitled to a living wage ?
Are they entitled to a living pension ?
Are they , through no fault of their own , now asked to make a profit on an industry that for over 100 years that was looked upon as a service , like the police , or healthcare ?
Yes , they need to innovate and extend services.
The one thing I cant understand is the ” we tried to deliver your parcel , but you were out card ” has an option to collect it at the depot , then proceeds to give almost exactly the same time slot to collect it , as they used to deliver it , when I was out
While not over entheused at picking a parcel up rather than having it delivered ,I cant understand why when the vast majority of people work 9-5 , the collection of parcels stops at 5:30 , when the staff are there most of the time till 10pm .
I do still think putting RMG into the private sector was the correct thing to do. People such as ourselves made it viable to do this. Am sure I am not the only person who has bought shares in RMG who sells online.
However to many shares are owned by the funds looking for short-term gains, far too many assets have been sold off for short term gains.
We now have a disgruntled workforce who are being asked to do more for less, we can understand this. Issue of our time are the poor employers with the 0 hour contract workers with poor conditions that are causing companies who would like to pay staff correctly being unable too and this is in many sectors.
However if RMG cannot get with the times others will. They need to invest in the actual business and embrace e-commerce more.
They should be on the phone to us with ways to help our business instead of us calling them to get new services. The 2d thing has been good and the loss rate is right down. Credit Suisse have taken a position clearly on it am always very wary of any broker positions.
Mind you in 2014 it dropped to 390 and we bought in again, now would I with Green still at the helm I am a lot more wary, as I would normally be looking to go again.
It needs a new CEO with a new direction and a team that understands the needs of it’s customers in e-commerce and not just the corporates and not so focused on short term gains. .
A company that has not enough elastic bands to go round the office and P739 cards for undelivered items.No wonder it is in a shambolic state. So short staffed can’t get days off, even after requesting them 5 months in advance.Unpaid overtime also .
We’re tired of the
Our postman’s great he always tells us and leaves a card if we’re not in for a delivery
Dribble
The postman can’t be bothered and the buyer can’t be bothered
And we get to refund
And the package is sent to Royal mails Auction for uncollected packages even though it had a return address