The Courier & Advertiser (Angus and Dundee)
Royal Mail to update after profit warning
Royal Mail will lay bare its trading woes in Thursday’s halfyear results after a recent stark profit warning sent shares plummeting to an all-time low.
The group warned last month that full-year earnings were now expected to tumble by up to 28%, which caused shares to plunge 18%.
It said it had failed to meet cost-saving aims, slashing its full-year target from £230 million to £100m, while its “productivity performance” was also significantly below plan.
Business uncertainty and the recent new data protection rules have also combined to hit marketing mail, which is hitting already under-pressure letter mailing volumes.
The group now expects full-year group underlying operating profits to be in the range of £500m to £550m, compared with £694m last year.
Royal Mail’s trading troubles come amid a tumultuous year for the group, which has faced investor and political pressure over pay deals for its current and former bosses.
Its pay plans were voted down by more than 70% of investors at its annual general meeting in July.
In a recent hearing in front of a House of Commons committee, Royal Mail admitted making a “big mistake” after the shareholder defeat.
Orna Ni-chionna, chairwoman of Royal Mail’s remuneration committee, said the firm failed to proactively talk to shareholders beforehand over the leaving payment for former chief executive Moya Greene, which included a fullyear cash bonus of £774,000.
The Commons committee also grilled Royal Mail over a £5.8m payout to new boss Rico Back made just before he was promoted from General Logistics Systems (GLS) – Royal Mail’s European parcels business – to the post of group chief executive.
The group has also seen a raft of boardroom changes, announcing the latest earlier this week with the news that UK letters and parcels chief Sue Whalley is stepping down only five months after her appointment to the board.
It is also looking for a new chairman-in-waiting following Peter Long’s departure in the wake of its shareholder revolt over pay.