Royal Mail shares drop after it warns over Amazon

[TrueBlueTerrier]

http://www.marketwatch.com/story/royal- ... 2014-11-19" onclick="window.open(this.href);return false;



LONDON--Shares in U.K.'s dominant postal company Royal Mail PLC fell more than 8% on Wednesday after it reported a fall in half-year profit and warned that continuing competition from online retailer Amazon.com Inc. will hamper growth.

Revenue in its fiscal first half ended Sept. 28 was near-flat at GBP4.53 billion ($7.08 billion) compared with GBP4.52 billion in the previous year, while net profit fell to EUR125 million from GBP1.22 billion in the previous year, when it benefited from a pension plan amendment.

Stripping out exceptional items such as the pension boost, net profit fell to GBP163 million from GBP168 million.

Royal Mail said revenue in its core U.K. operation was flat, reflecting a reduction in the rate of growth of the addressable U.K. parcels market after Amazon launched its own delivery network.

The impact of Amazon's own delivery service will also limit the parcels market Royal Mail can address in the next two years, the company said. They added the U.K. parcels market that Royal Mail can address will grow by 1% to 2% a year for the next two years.

Amazon has been ramping up its own delivery capabilities in the U.K. in recent months. Last month it said it would tap into the distribution network of newspaper delivery company Connect Group PLC to launch a same-day pick up service for parcels.

Analysts at Jefferies said Royal Mail's results were better than expected but added parcel revenue is likely to remain "stable at best" given competition from Amazon.

"Our performance remains in line with our expectations for the full year, " said Chief Executive Moya Greene.

"But, as always, this depends on us delivering another great Christmas, for which we are fully prepared," she added.

Royal Mail, which was privatized last year, can trace its roots back to 1516 when King Henry VIII ordered the creation of the first national post service.

One bright spot in its results was growth in its European parcels business, with revenue up 7% to GBP813 million.

Shares at 1216 GMT were down 34 pence, or 7.2%, at 435 pence valuing the company at GBP4.4 billion.

[britwrit]

Eh. I'm not so pessimistic. We're keeping our share of the UK parcels market and even increased it a bit. Yeah, we had to cut prices some but is that really such a shock, considering how much competition we face?

Anyway, according to the report, we'll all get paid 6.7 pence a dividend on 14 January. (That's in the middle of page 15 of the report, a link to the PDF is here: http://www.royalmailgroup.com/sites/def ... 202014.pdf)

[Lounge Lizard]

Just goes to show what a mistake it would have been to join RM's Save As You Earn scheme.

[RobertT]

Just goes to show what a mistake it would have been to join RM's Save As You Earn scheme.

At the time of writing the RM share price is £4.26 which equals a 66p per share profit for those who have joined SAYE or around 18%. So still a lot better than any savings account on the market!

[A2B]

Just goes to show what a mistake it would have been to join RM's Save As You Earn scheme.

Please explain why?

[Chelseablue]

I joined it, was a no brainer. Isas and saving s are a joke at mo with the banks so..

[red666bear]

Just goes to show what a mistake it would have been to join RM's Save As You Earn scheme.

Your the fool for not joining it!

[Lounge Lizard]

Just goes to show what a mistake it would have been to join RM's Save As You Earn scheme.

Please explain why?

Because Royal Mail keeps hold of a portion of your income for quite some time then at the end of it all they give you a piddling extra bit of money.

[RobertT]

Just goes to show what a mistake it would have been to join RM's Save As You Earn scheme.

Please explain why?

Because Royal Mail keeps hold of a portion of your income for quite some time then at the end of it all they give you a piddling extra bit of money.

What are you talking about?

RM don’t hold onto anything and there is no income at all until shares are purchased at the end of the 3 year term and start to pay out dividends, assuming they’re not sold beforehand.

The potential gains (and losses) are proportional to the amount paid in, so if only piddling amounts are saved, then only piddling amounts will be made (or lost).

[TrueBlueTerrier]

Also isn't the money held in an account separate and independent of Royal Mail.

[RobertT]

Also isn't the money held in an account separate and independent of Royal Mail.

Yes.

[Lounge Lizard]

Just goes to show what a mistake it would have been to join RM's Save As You Earn scheme.

Please explain why?

Because Royal Mail keeps hold of a portion of your income for quite some time then at the end of it all they give you a piddling extra bit of money.

What are you talking about?

RM don’t hold onto anything and there is no income at all until shares are purchased at the end of the 3 year term and start to pay out dividends, assuming they’re not sold beforehand.

The potential gains (and losses) are proportional to the amount paid in, so if only piddling amounts are saved, then only piddling amounts will be made (or lost).

Of course only piddling amounts are saved. Nobody's going to be retiring months earlier from what they eventually get from this scheme.

[A2B]

Just goes to show what a mistake it would have been to join RM's Save As You Earn scheme.

Please explain why?

Because Royal Mail keeps hold of a portion of your income for quite some time then at the end of it all they give you a piddling extra bit of money.

What are you talking about?

RM don’t hold onto anything and there is no income at all until shares are purchased at the end of the 3 year term and start to pay out dividends, assuming they’re not sold beforehand.

The potential gains (and losses) are proportional to the amount paid in, so if only piddling amounts are saved, then only piddling amounts will be made (or lost).

Of course only piddling amounts are saved. Nobody's going to be retiring months earlier from what they eventually get from this scheme.

[RobertT]

Of course only piddling amounts are saved. Nobody's going to be retiring months earlier from what they eventually get from this scheme.

SAYE is essentially no different to any other form of saving, in as much as the whole point is that you save an amount on a regular basis with a view to spending it at a later date. And the more you save now, the more you'll have in the future.

What an individual chooses to spend it on is up to them. If you saved the max of £59 per month(after scale back) and based on the share price today of £4.30 then in 3 years time you’d have RM shares to the value of £2,537. That equates to an increase of over 19% on your money.

I see no reason why that couldn’t be put towards your retirement if that's what you wanted to do.