Shares dive after sales warning

ROYAL Mail’s share price plunged to a record low yesterday as it delivered a warning about the year ahead.

The postal giant said it faced a “challenging” 12 months with its letters arm likely to suffer a loss.

Bosses vowed to push on with overhauling the business despite the Communication Workers Union threatening industrial action over workers’ job security and terms.

Chief executive Rico Back said: “We cannot afford to delay this essential transformation any longer.”

Royal Mail said the threat of strikes had prompted some parcel customers to switch to rivals. The Black Friday online shopping blitz in November saw it handle more parcels than forecast but the rest of Christmas was quieter than hoped. In total, parcel volumes from April to December 31 rose 3 per cent. More of an issue was a gradual decline in letter deliveries. Volumes fell 9 per cent between April and December, with stamp price rises limiting the drop in revenues to 1.5 per cent.

Royal Mail stuck to its forecast that operating profits in the year to March would be between £300-340million, down from £509m in 2019 and £694m in 2018. The firm’s share price tumbled 8 per cent to 173p yesterday. Its shares when floated by the Government in 2013 were 330p and they peaked at 628p in 2018.

Adam Vettese of investment platform eToro said: “If the postal service does not turn things around soon, the dividend will come under threat.”