RE: The time is now, the game is over, let the rerate begin10 Jul 2023 17:31
Royal Mail owner International Distribution Services’ (IDS) share price has delivered investors a healthy return over the past month. After a series of disruptive strikes, IDS finally struck a deal with the Communication Workers Union over pay and working conditions. With that out of the way, the hope is that the group will swing back into profit, having taken a battering in its last set of results.
IDS share price up over 13% since the start of June.
End to strikes could provide IDS with much-needed stability after months of volatility.
Forecasts are for revenue and earnings to grow over next couple of years.
International Distribution Services’ [IDS] share price has gained over 13% since 1 June. The stock hit a high of 231.11p in intraday trading on 4 July. While IDS’s share price has softened slightly, closing Friday 7 July at 222.1p, it is trading in a different class to May, when it slumped over 22%, to end the month trading just under 200p.
Still, over the past 12 months the stock has slipped 18% and is trading below a 260p year-high, hit in intraday trading on 25 April. This could signal that, despite the recent upswing, the stock is trading at a discount.
How is IDS performing?
IDS’s share price slump in May can partly be blamed on the publication of a bruising set of annual results.
For the 52 weeks ending 26 March, IDS reported a group operating loss of £748m, down from a £577m profit in the same period the previous year. Royal Mail posted an operating loss of £1.04bn, having made a £250m profit the previous year. Logistics business GLS delivered a £296m profit, down from £327m.
On an adjusted basis Royal Mail’s operating losses totalled £419m, down from a £416m profit. IDS blamed this on industrial action, inability to deliver proposed in-year cost saving, and fewer Covid-19 test kits being sent.
Prior to the results in May, it was announced that Royal Mail CEO Simon Thompson would be stepping down in October. Thompson’s two-year tenure at Royal Mail was marked by strikes and fractious dealings with the Communications Workers Union (CWU).
Thompson said: “now is the right time to hand over to a new CEO to deliver the next stage of the company's reinvention”. Symbolically, at least, the departure of Thompson could represent a fresh start for Royal Mail, after a bumpy 12 months.