Analysts know better?1 Jun 2021 18:11
I've worked for Royal Mail for 15 years so would just like to give my take on the current state of play.
Since non-essential retailers reopened on 12th April, parcel volumes have decreased steadily and significantly.
When Keith Williams issued the finals recently and stated that parcels were down 2% in April, yoy we'd only had 2 weeks of normal trading, but that didn't stop some analysts from extrapolating ridiculous figures for the year ahead from those 2 weeks, when the chairman himself urged caution and stated that it was too early to make an accurate forecast!
From my own experience up until June, I would estimate that parcels are now down at least 40% yoy.
As for this supposed 'rebound' in letters, I'd say that it's maybe back to pre-lockdown levels(you know when RM were predicting losses of hundreds of millions of pounds)
Bulk, unaddressed B2C(the lucrative sort) mail has virtually gone extinct on most walks. Unfortunately for some of these over enthusiastic analysts, they seem to know none of this and are seemingly disregarding that the entire country was locked down for the best part of the year handing RM a captive audience. How bizarre.
The re-introduction into the FTSE 100 will inevitably move the share price higher for now, but in my opinion, as soon as the chairman does provide a trading update and guidance which reflects reality and not some analysts' collective fantasy, this share is going down and I will be ready to short it(hope I get my timing right.)
When people talk about Royal Mail modernising and adopting new technology(a few drones in the outer Hebrides is gonna make all the difference right?) , I just laugh.
If you could see how primitive RM delivery offices are(we still sign in with pen and paper), that the average age of a postie is 53 and most workers(and managers for that matter)attitudes and mindsets belong to the era of a state owned monopoly, not the highly competitive free market of 2021, you would laugh too.
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