Royal Mail posts a share fall over strike worries
A BITTER stand-off with unions and declining letter volumes hung over Royal Mail yesterday as its shares took a battering.
The company sank by as much as 5.6pc after analysts at Credit Suisse downgraded it from ‘neutral’ to ‘underperform’.
They warned big customers such as Royal Bank of Scotland, Santander and the Government were all slashing the amount of letters sent and the trend was likely to continue.
Meanwhile, their note also said a row with workers about pensions and pay was likely to result in a costly labour deal.
Talks between bosses and the Communication Workers Union have yet to bear fruit, despite the personal involvement of chief executive Moya Greene, and a damaging strike in the run-up to Christmas is still a possibility.
The analyst note added: ‘We expect worsening letter revenue trends and a costly labour deal to render 2018 earnings unsustainable.’
At the end of the day Royal Mail shares finished down 3.9pc, or by Matt Oliver 15.3p, to 374.4p. The fall took the stock to one of its lowest points since the firm floated at 330p a share after being privatised in 2013. But Credit Suisse cut its price target to below that level, from 492p to 325p. It was also a torrid day for Weir
Group, which said profits would be lower than predicted in a trading update for three months to September 30.
Bosses at the company, which makes pipes and valves for mining and energy firms, blamed project delays, one- off plant costs and investment in its minerals business.
It was despite the revival of North America’s shale industry helping to drive up orders in its oil and gas business by nearly 60pc when compared to the same period last year. Shares fell 6.8pc, or 143p, to 1953p.
There was better news for bookmakers after it emerged the Government’s crackdown on fixedodds betting was not as tough as expected. William Hill and Lad
brokes Coral moved higher – 2.3pc or 5.9p to 258.4p and 1.7pc or 2.1p to 127.4p respectively – after ministers announced they would consult on measures to cap the size of stakes gamblers can place on fixed-odds betting terminals.
Under the plans, the limit would be either £50, £30, £20 or as low as £2 – but analysts predicted ‘a more benign’ result of £25 was more likely.
Chemicals maker Croda gained after the firm boosted sales and stuck with annual targets.
The company said sales rose 6.1pc to £334.6m for the three months to September 30, up from £315.3m in 2016. It was largely thanks to a 7.5pc sales increase at its personal care arm.
The results sent shares up 4.2pc, or 170p to 4184p. Chief executive Steve Foots said: ‘We continue to deliver on our priorities for 2017 – driving profitability through premium, faster growth market niches; improving performance in less differentiated markets; and making progress towards our target increases in return on sales in life sciences and performance technologies.’
The FTSE 100 edged up less than 0.1pc or 5.27 points to 7,493.08.
Investors were also busy snapping up shares in pharmaceuticals firm Indivior.
The US Food and Drug Administration’s advisory committee was yesterday due to discuss RBP6000, a long-lasting injection to treat opioid-use disorder.
Commissioner Scott Gottlieb has vowed to ‘take whatever steps we can to reduce the scope and human tragedy created by the epidemic of addiction to opioids’ in the US. It is expected to issue a formal decision by November 30.
Indivior shares surged 7.6pc, or 26.3p, to 371.6p in anticipation of a positive result.