ROYAL Mail was accused of “blaming everyone but itself” today as it admitted a shake-up led by new chief executive Rico Back was “behind schedule” amid fears that it still faces a Christmas strike by postal workers. The shares crashed 17%. Back was handed nearly £6 million to leave his former job working for Royal Mail’s parcels unit General Logistics Systems. He will be paid around £1 million a year in salary.
He admitted: “Our transformation is behind schedule. We are investing more because of the industrial relations environment, the General Election and Christmas, to underpin our quality of service at this key time.” He added: “People are posting fewer letters and receiving more parcels. We have to adapt to that change.” In the half year profits were £173 million on a 5% rise in revenues of £5.2 billion. That was the best sales performance for five years. It won a High Court injunction to prevent a postal strike that would disrupt Christmas trading and possibly postal votes in the General Election.
The union is appealing that ruling, but legal experts suggest it is unlikely to prevail. Royal Mail said it has been in touch with the Communication Workers Union and is open to talks. It said: “Industrial action, or the threat of it, can only hurt our company, and our colleagues.” The shares, which floated at 330p in 2013 and roared to 489p on the first day of trading, fell 40p to a new low of 191p.
The City was alarmed at the company’s stark admission that its transformation plan is lagging. Russ Mould, investment director at AJ Bell, said: “Royal Mail is blaming the unions, the election and even Santa for having to invest more money because its transformation is behind schedule, but it doesn’t appear to be blaming itself. “Comments that a difficult backdrop and various other headwinds could see the UK business lose money next financial year have understandably spooked investors, sending the shares plummeting.”
Royal Mail also warned that the UK business could be loss making next year. Some saw that as an attempt to put pressure on the union to back off from strike threats. An interim dividend of 7.5p a share will be paid, down from 8p last year