Royal Mail’s (LON:RMG) finances go under the microscope on Tuesday for the fourth time since last year’s controversial privatisation with its interim management statement today.
Headlines have been centred on the £1bn or so taxpayers missed out on when it floated, but the headwinds have been getting stronger including the recent shock that French competition authorities are investigating its GLS France business.
Deutsche Bank predicted “many challenges” ahead for the group such as a “structural decline in traditional mail volumes”, as well as mounting competition from TNT Post UK, pricing pressures and wage inflation.
“We think these pressures can be offset to some extent from increased pricing in mail and efficiency gains, but overall we think that growth will be hard to come by,” the broker said.
“Whilst cash flow generation looks good, shareholders in our view will not benefit, as cash is required for on-going modernisation, which we think will last for several years.”
Cantor Fitzgerald sees “considerable volume, pricing and cost headwinds in the next 18 months”, but despite this, expect the company still to adopt a reasonably upbeat tone.
Chemicals firm Croda (LON:CRDA) issued a profit warning in June due to weakening sales in industrial chemicals, currency headwinds and weak consumer division margins due to a poorer mix.
Significant announcements expected
Interims: McColl’s Retail Group, Arm Holdings, Royal Mail Croda
Final results: IG Group
Trading statements: IQE