Royal Mail leaves the FTSE 100 in quarterly shake-up

[RobertT]

http://www.bbc.co.uk/news/business-41093894" onclick="window.open(this.href);return false;

Royal Mail leaves the FTSE 100 in quarterly shake-up

The FTSE 100 closed higher on Wednesday, but Royal Mail is set to leave the ranks of the blue chip index.
The blue chip index finished up 27.83 points at 7,365.26.

In FTSE Russell's quarterly review of its constituents, Royal Mail will be relegated to the FTSE 250 alongside troubled doorstep lender Provident Financial.
The postal service has been a FTSE 100 company since shortly after being privatised in 2013.

On Wednesday, Royal Mail's shares closed at 390.5p, giving the postal service a market capitalisation of £4bn.
A company's place in the FTSE 100 or FTSE 250 is determined by its market capitalisation at the close of trading on the day of the review.
If a group has a value that puts it at 90th place or above, it will join the FTSE 100. If it falls to the 111th position or below, it will be demoted to the FTSE 250.

Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: "Royal Mail has lost its struggle to maintain a place in the FTSE 100. We're not sure that's something you can lay at chief executive Moya Greene's door though, as the group continues to face tough market conditions.
"Letter volumes have seeped away faster than the group had expected, partly as a result direct marketing drying up as business confidence slumped after the EU referendum, while pricing remains tough in parcels."

Shares in Provident Financial, which recently issued a profit warning and parted ways with its chief executive Peter Crook, finished 1.68% lower at 891.27p to value the company at £3.1bn. It will also descend to the FTSE 250.

In contrast, NMC Health, the Abu Dhabi-based hospital operator, will move up from the FTSE 250 into the FTSE 100 along with housebuilder Berkeley Group.
All the changes from the review be implemented at the close of business on 15 September and will take effect from the start of trading on 18 September.
The FTSE 250 closed 88.67 points up at 19,616.56.

Northgate, the commercial vehicle hire group, miner Petra Diamonds and construction firm Carillion will fall out of the FTSE 250. Those moving up to the FTSE 250 include online betting group 888 Holdings.

On the currency markets, the pound edged up by 0.48% against the euro at 1.0843 euros. Sterling was marginally higher against the dollar at $1.2931..

[Lounge Lizard]

"We're not sure that's something you can lay at chief executive Moya Greene's door though, as the group continues to face tough market conditions."

[jetblack]

I know the conventional wisdom (as well as this article) says that the share price (and so market cap.) has declined due to a decrease in letters - but how much of the decline this year has been down to pensions/the threat of IA ?
According to this RMG has the 4th best price to earnings ratio of the FTSE 100 companies. That means, effectively, that compared to the rest, it is underpriced- and so represents very good value.

If I weren't invested in RMG quite a lot already (though no more than the rest of you that haven't sold their shares) I reckon they'd be a good buy. M.Greene just bought a bucket load.

Share price will drop further now RMG is demoted to FTSE250.
I half jokingly suggested to someone on here that they should short RMG a few months back - turns out I wasn't too far wide of the mark.

Maybe the City has a higher opinion of the likelihood of successful industrial action by the union than some would like to let on.

[wacko74]

"We're not sure that's something you can lay at chief executive Moya Greene's door though, as the group continues to face tough market conditions."

I'm guessing that's ironic applause. Right?

[Lounge Lizard]

"We're not sure that's something you can lay at chief executive Moya Greene's door though, as the group continues to face tough market conditions."

I'm guessing that's ironic applause. Right?

Er, yes.

[nataddick]

The City likes certainty - the decline in letters is a 'known' whereas the extent of competition in parcels is perceived as an 'unknown'. Yet, none of our competitors can cope with the additional volumes generated in the crucial quarter of the year. So many customers (who we are constantly reminded pay our wages !) turn to RM during crucial periods, to get the job done. Amazon do it every year - when the going get's tough they turn to RM - screw us over on volume/price ratio and poor quality presentation but nevertheless, we welcome them back with open arms! They account for less than 6% of our total revenue - have built their business in the UK on the back of RM over many years and now try to regularly screw us over. Personally, I would remove their 'presented' burden and look to grow the business elsewhere.

I have invested a bob or two of my own in RM shares because I value the business. Why? - the cashflow is healthy, as is the dividend and the company aim to pursue a progressive dividend strategy - currently a yield of around 6%. The company has a healthy property portfolio, way above net book value. MP site is a prime example. The cost of providing the free shares is expected to fall by about £60m next year and is another source of 'hidden' profit tucked away. The current share price reflects the uncertainty over the cost of any future pension fund contributions/pay deal that may yet be agreed and the possible impact of IA. The threat has been known for some time but the outcome remains uncertain.

Jet - I thought Moya had received 57,870 shares as a result of a LTIP - not an investment on her part but I stand to be corrected !

http://phx.corporate-ir.net/phoenix.zht ... ID=2289865" onclick="window.open(this.href);return false;

I am prepared to 'hold' my RM shares and bide my time. If the CWU can do a deal that is to benefit of members and this hits the share price than so be it. I am backing the CWU and TP's leadership. RM are on the ropes - the one pension for all is sound, as is a decent pay rise for all.

In the near future, I see RM split into two businesses. One with responsibility for the USO, with a Government subsidy and the other, a parcels business with the freedom to compete in the open market against all other competitors.

RM's exit from the FTSE 100 has been predicted for several months and so will certainly come as no surprise to those in the know

[Lounge Lizard]

The City likes certainty - the decline in letters is a 'known' whereas the extent of competition in parcels is perceived as an 'unknown'. Yet, none of our competitors can cope with the additional volumes generated in the crucial quarter of the year. So many customers (who we are constantly reminded pay our wages !) turn to RM during crucial periods, to get the job done. Amazon do it every year - when the going get's tough they turn to RM - screw us over on volume/price ratio and poor quality presentation but nevertheless, we welcome them back with open arms! They account for less than 6% of our total revenue - have built their business in the UK on the back of RM over many years and now try to regularly screw us over. Personally, I would remove their 'presented' burden and look to grow the business elsewhere.

I have invested a bob or two of my own in RM shares because I value the business. Why? - the cashflow is healthy, as is the dividend and the company aim to pursue a progressive dividend strategy - currently a yield of around 6%. The company has a healthy property portfolio, way above net book value. MP site is a prime example. The cost of providing the free shares is expecting to fall by about £60m next year and is another source of 'hidden' profit tucked away. The current share price reflects the uncertainty over the cost of any future pension fund contributions/pay deal that may yet be agreed and the possible impact of IA. The threat has been known for some time but the outcome remains uncertain.

Jet - I thought Moya had received 57,870 shares as a result of a LTIP - not an investment on her part but I stand to be corrected !

http://phx.corporate-ir.net/phoenix.zht ... ID=2289865" onclick="window.open(this.href);return false;

I am prepared to 'hold' my RM shares and bide my time. If the CWU can do a deal that is to benefit of members and this hits the share price than so be it. I am backing the CWU and TP's leadership. RM are on the ropes - the one pension for all is sound, as is a decent pay rise for all.

In the near future, I see RM split into two businesses. One with responsibility for the USO, with a Government subsidy and the other, a parcels business with the freedom to compete in the open market against all other competitors.

RM's exit from the FTSE 100 has been predicted for several months and so will certainly come as so no surprise to those in the know

"In the near future, I see RM split into two businesses. One with responsibility for the USO, with a Government subsidy and the other, a parcels business with the freedom to compete in the open market against all other competitors" reminds me of Royal Mail being separated into three divisions in 1986, Royal Mail Parcels being rebranded as Parcelforce four years later.