The Royal Mail share price has hit another low in the past week as the value of the company continues to slide. Earlier in the year, the stock hit a high after the privatised national postal supplier delivered excellent end of year results. However, the lustre of those earnings has been dented by a recent profit warning. This has not delighted investors and numerous analysts have changed their advice on Royal Mail shares and are recommending shareholders ‘sell’.
When floated on the stock exchange in 2013 the Royal Mail share price was 455p at the end of the first day trading and earlier this year they topped 631p. At the end of last week they saw a low of 338.90p.
We wrote about that profit warning here. They have let interested parties know that in 2018 they expect a profit of £500m-£550m which is unfavourable compared with £694m from last year.
Royal Mail has tried to reassure investors by saying that it will be examining where it can make savings related to spending including management tiering, head office expense and the like.
One problem that this represents for Royal Mail is that it dents the holdings of Royal Mail staff who all received options during the privatisation process. There are also rumours and rumblings that part of the current problems are related to relations between the higher levels of management, staff in general and also the trade unions.
The big worry as Royal Mail enters the most critical quarter of the year is that there is no disruption to the service. Many businesses, online and otherwise, rely on having their letters and parcels delivered by Royal Mail, especially at this time of year.
But could this also be a portent for price rises from Royal Mail in 2019? Maybe so. And don’t forget that USPS, the USA Royal Mail equivalent, is suffering similar problems and has already asked the regulators there for permission to significantly increase the price of stamps and parcels.