Mail shares dive as letters slump Postal giant crashes by £900m in a day

NEARLY £900million was wiped off Royal Mail’s value yesterday as its new boss issued a shock profit warning.

The privatised postal giant refused to rule out stamp prices rising after suffering a worse than expected slump in the number of letters being sent.

The drop scuppered a productivity drive, meaning it won’t be able to cut costs as much as planned – down £100m this year compared with an earmarked £230m.

As a result Royal Mail’s annual profits are expected to tumble from £694m to between £500m to £550m.

The unscheduled trading update saw Royal Mail’s share price crash by more than a fifth in the space of 14 minutes – from 490p to 381p. It recovered a bit but still ended the day down almost 18% at 391p.

The plunge came just months after Royal Mail’s new boss, Rico Back, took over.

Back, who has been criticised for his bumper pay deal and the fact that he commutes from his home in Switzerland, said trading in the UK had been “challenging”.

Finance boss Stuart Simpson did not rule out price rises to claw back profits and confirmed it was looking at “management layers” to reduce costs.

Royal Mail said yesterday the number of addressed letters being sent fell by a hefty 7% between March and September. The fall was fuelled by “business uncertainty”, new EU marketing rules and fewer people sending letters, it said.

The big drop meant it had not benefited from planned changes within the business designed to lower costs.

Royal Mail chairman Peter Long announced last month he was quitting.

Helal Miah, investment research analyst at The Share Centre, said: “It seems that Rico Back is throwing out the baby with the bath water so that he can begin his tenure with a clean slate.”