Shares in Royal Mail (LON:RMG) plunged on Thursday as the postal service and courier company said that its transformation plan is behind schedule.
Shares in the company were down over 17% during Thursday morning trading.
Royal Mail also warned that weak GDP and ongoing business uncertainty is expected to negatively impact the business in the second half of the year.
As a result, Royal Mail said that addressed letter volume decline (excluding elections) is now expected to be in the 7-9% range for the full year.
The company said that, for the half year ended 29 September, group revenue was up 5.1%.
Reported operating profit amounted to £61 million, up on the £4 million operating loss posted the same period a year prior.
The company, which faces strike threat, urged trade unions at the end of October to cancel potential strikes planned over the festive period.
“Our profitability performance is in line with our expectations for the half year, despite considerable UK economic and political uncertainty,” Rico Back, Group Chief Executive Officer, commented on the results.
“The UK letter revenue performance in the first half is our best for 5 years. It will also benefit from the General Election in the second half. But, the outlook, excluding elections, for the letters business in the UK is challenging. Lower than anticipated GDP and lower GDP forecasts for 2020-21, together with business uncertainty, are expected to have an impact on addressed letter volumes,” the Group Chief Executive Officer warned.
The Group Chief Executive Officer continued: “Our transformation is behind schedule. We are investing more because of the industrial relations environment, the General Election and Christmas, to underpin our Quality of Service at this key time. This is likely to impact our productivity for the remainder of the year. When combined, revenue and cost headwinds could possibly result in a break-even or loss-making position for the UK business in 2020-21. We maintain the ambitions associated with our Journey 2024 plan as set out in our full year results in May.”
Shares in Royal Mail plc (LON:RMG) were down on Thursday, trading at -17.51% as of 09:32 GMT.
