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@ Derek Rocholl.
"""Where RM does well is on small parcels/large letters because it delivers them alongside letters."""
Totally agree. Yet they take away the quickest and least physical means of delivering them.
If only the hierarchy had asked a postie!!!!
Derek, let's finish this one for ever.
"On 1 April 2012, Post Office Ltd became independent of Royal Mail Group, and was reorganised to become a subsidiary of Royal Mail Holdings, with a separate management and board of directors." Wikipedia.
That event took place eighteen months before Cable floated RMG on the stock market.
RMG and POCL are never ever getting back together again (to quote Ms Taylor Swift) so get over it please!
AngerZ if RMG had retained ownership of the Post Office they would already have an FS business to invest in. It is a very common model for Post Office organisations - see Japan and France.
Your figure of 141bn Parcels growth globally by 20205 is spread amongst millions of couriers and logistics companies of whom RMG is just one.
As for better and more relevant parcel companies in the U.K.
DHL Is probably at the top of the pile for complex logistics and B2B
DPD is probably best for next day B2C
Amazon is growing fastest
There are several markets where RM is not present in a meaningful way - cold chain, high value/secure, food delivery
In the same day space RM’s offering is weak and incoherent.
Where RM does well is on small parcels/large letters because it delivers them alongside letters.
Agreed Anger, we need to concentrate on delivering what we have now even, without even pursuing more parcels, let alone another business altogether!
Angerz, as for your numbers they show that the profitability of the business was on the slide until the windfall pandemic year. Over the period and in the decade before RMs market share in both the communications market (where letters operate) and the parcels market have fallen. It is now quite easy to envisage a fully functioning U.K. C2X and B2C parcels collection and delivery system without Royal Mail. It would have been very difficult to see that prospect before 2012. Hence my point about declining relevance.
Oligarch, before privatisation 2012 Post Office Ltd was part of Royal Mail Group.
Post Office Ltd was kept in public ownership when the Government sold off the rest of RMG.
I noticed today that Nick Landon has made an appointment to a new position of Managing Director of Royal Mail Medical.
If this signals some real investment in diversified capability to serve such a huge and growing market it will be very positive move.
Derek, I'm not sure that RMG ever owned the Post Office?
As I understand the situation, POCL is owned by the Government.
Angerz - diversification involves attacking different markets with different products and services. Investing in the capability to handle parcels more sustainably and efficiently using eVans and automation may be positive but it isn’t diversification, and it is to a large extent a catch up exercise.
RMG could and should diversify by expanding into other areas of the logistics supply chain to drive more value out of its client relationships e.g. by: building cold chain logistics capability to extend its offer to the medical sector into high value high growth areas; buying a significant capability in the warehouse/fulfilment space, adding a comprehensive packaging capability to its offer, building an extended footprint in the circular economy, or even buying the Post Office back and investing in a banking and financial services business.
AngerSharkz, on the subject of diversification, we already know that both the BoD and CWU are both actively seeking to roll out a seven day parcels service whilst keeping the letter deliveries and USO viable. This may mean that letter deliveries drop to a five day service (Act of Parliament required) however a seven day parcel delivery service will require extra hours to achieve this which I am sure will meet with approval from the CWU.
RM have also been trialling different types of electric vehicles which will be needed very soon to replace the current ageing fleet. I would imagine that this will be phased on over many years however no one is talking about costs...yet.
I don’t have a beef with RMG, I want to see it thrive but don’t see that happening unless it stops giving away profits that it should be investing in diversification.
If you could have a £10 share and OTT dividends on the way, we would be there now. The company is falling further and further behind peer group companies it used to lead.
The market capitalisation of a business is the share price x the number of shares. If the number of shares is reduced and the share price remains static the market capitalisation is lower. It’s not rocket science.
Angerz I don’t have a beef with RMG I just want it to invest in diversification so that I can be more successful in the long run. Handing out profits in OTT dividends will just result in it becoming increasingly less significant, and we have been on that track since 2012.
There are many ways to value a business. And none of them are perfect. The price of the shares is fluid, hence the wide daily range of movement. The price may or may not reflect the current or future turnover that is expected, the profit or loss from the turnover or the distribution of proceeds from profits or disposl of assets.
The market cap is a snapshot of value on formal dates and changes based on share price movement is relative between such announcement.
Alas Smith, isn’t market capitalisation calculated by multiplying the number of shares by the share price ? If there were fewer shares and the share price remains static after a buy back how could market capitalisation increase ?
Personally I would rather my shares are worth £10 each in 5 years time than have them worth £3 each having had a 20p dividend payment for 5 years.
Short term greed from shareholders is a blight on companies like RMG.
Immediately cancelled post being bought
Are the 200m shares burned forever or is it possible that they may be reissued at a later stage?
There is a chasm difference between a Director purchase and bargains executed in a share buy back.
The buy back is undertaken at the discretion of a Merchant Bank in amounts and timings that are determined through the timescale of the company and algorithim chosen by the Bank. Director dealings are of minimal importance and negligible effect on the market cap. The market cap is of interest to all investors and with fewer shares in circulation, the M Cap will rise even if the share price remains static.
The share price is only relevent at the point when an investor wishes to deal in the shares. The market cap is of particular interest to fund managers that can only deal or hold shares in companies whose mkt cap exceeds a minimm level in their articles.
When directors buy shares three days ahead of the company buying its own shares at higher prices and the amounts of shares involved is almost the same, the optics aren’t good.
Apart from which this company needs to invest in diversification to improve its long term prospects instead of wasting windfall profits with share buy backs and OTT dividend payments.
AngerSharkz, on a side note, it's also worth noting that Rickenbacker started buying shares at over 300p and then bought all the way down to the low 180p region.
I know that history never repeats itself but never say never etc...
I have no idea what that’s got to do with my point or of the optics of Directors making money by buying shares a couple of days ahead of the company making a purchase of its own shares.
There is something I find a bit uncomfortable about Directors of the company buying 40,000 shares at a price of £4.72 a few days before the company buys back just over 40k shares for prices above £5.05.
I can’t help feeling there are better ways for RMG to be using profits for the long term benefit of the company, its owners, employees and customers.
Very little volume though so far. From memory the previous buyback was circa 16000.
Interesting to see the details of the buyback, number of trades, price and timing. There were a few decent size trades reported after close last night as well so overall little impact on SP. Perhaps augurs well for a more positive SP move today. As always we shall see.