We regard the recent broad set of agreements between the two parties as a landmark, Barclays said
The recent agreement between Royal Mail PLC (LON:RMG) and the CWU union over pensions, has removed a toxic element from the stock, in Barclays' view.
The bank has kept its rating at 'overweight' and raised its forecasts following the recent agreement and the parcels and letters delivery giant's February 1 trading update.
We regard the recent broad set of agreements between the two parties as a landmark, Barclays said.
To have closed, with a small surplus, one of the larger defined benefit pension schemes in the UK; to have replaced it with an affordable defined contribution scheme (possibly collective subject to government negotiation); and to have agreed on a pay deal to April 2020, without industrial action, is a remarkable and forward thinking effort by all involved, in our view, the bank said.
The bank cautions that it will still be necessary to see how the moves to a shorter working week and associated changes in working practices develop, but there is now a strong platform, in its view.
Yes, I take into account broker stances as well as targets by all brokers on ones I own. I have successfully in the past used these levels to decease or sell when a target is reached. Example of one recently would be XLM which I sold over 2.21 when the highest broker target at the time was 2.20. There must be a fair amount of other followers as sellers in XLM showed their faces and even before the correction had brought the price back down close to 20%
I have been surprised at the levels reached by RMG in recent days and agree would put it down to relief of the unions and then the tracking funds building back up their weightings ahead of FTSE inclusion. We are not far away from Goldmans 5.60 and maybe we see a close return to the highs of 5.80 - 6.00 range which may then see profit taking or start just before then.
When companies join the Ftse 100 Tackers, Investment Companies and Fund Managers buy into the company, Saying that we dealing some intelligent people so a lot of them could have already bought into the company positioning themselves before the announcement so the effect on the share price might be minimal.
As a betting man still believe there is still a lot of good News Story to come which will help to push the share price forward.
With Moya Green she will view her job completed. Pensions, Share price & a new way forward with ticks by all of them. We could see Rico Back GLS double digit man taking over the top position for a couple of years before a younger man taking over.
Does anyone take notice of broker ratings ? A lot of smaller brokers and pension funds seem to rate RM a lot higher than the big name brokers. Could also be funds buying in before RM is back in the FTSE 100 again.
Who would have imagined that in a situation where the FTSE is now back to 2016 levels, RMG have transformed from a dead duck to a shining star.
Ironically RMG are also back to 2016 SP levels but in a good way.
It seems evident a rerating of RM is going on. Admittedly the sp is only back to previous levels before the long decline to the 370 mark. Some of the brokers have always seemed very negative on RM so I do take some pleasure in those being proved wrong. However RM looks a lot safer stock to hold at the moment. I was pretty sure my further purchase last Friday was a good investment but I thought it would take a while longer to get to these levels.
My own fair value rating on RM is 550-575. Purely based on Dividend and cover. Risk eg Strike threats ,Pension issue, Pay rises also sorted until 2020.
RM maybe boring most of the time but in these uncertain times it seems a good investment.
Yes I do work for RM and I do hold quite a few shares now.
Yes RMG have done a lot on data in recent years and yes, they have it captured. I worked on the Enterprise Data Warehouse that holds the information myself. It's yet to be converted to products just as you say, but the back-bone is already there.
If you are interested in this search Catherine Doran Computer Weekly as I know of at least one related public pronouncement re things I was working on personally. (which is why the above is not insider info). I hope that helps you in your share decisions deshulme. NB: Caterine might not be there now - but she was CIO at the time.
Held £5K for two years past. Sold for a profit of £87 which with EXCELLENT dividends was £625 profit over two years or 6.25% per annum in a Tax-free self select ISA.
iii attracts a lot of Day Trader and short term comment. It would do - those guys are about on the sites to post more often, but the above is an another definition of success. I have experienced next to no equity growth with RMG.L but the income story has been very satisfactory - so far.
Time to move on because the share has a bit too much of the "interesting times" about it recently. It's someone else's growth tip or perhaps their next big mistake.
Good luck if this is your personal purchase point!
Looking through the agreement it may look as the management have given Royal Mail have had a bad deal, butLooking through the small print Royal Mail now have agreement so Data Capture from Various forms of technology can be used for various actions to cut costs and improve visibility to many business customers.
At no extra charge 2D bar-codes have helped to keep large letters & small packets at a very competitive price which complement USO deliveries. Quick easy to handle and very often meaning a first time delivery with visibility for the customer on deliveries. These are seen by Royal Mail Sweat Spot which are helping increase revenue each year since the bar-codes have been introduced.
The biggest selling point will be when Royal Mail release the information to the public so when someone sends a Parcel they can access the information when, where and GPS pointer on a map where the Postman was standing when he scanned and delivered the item.
I'm pleased with the increase in SP. The markets like nothing better than long term stability in a company. It did somewhat temper what I was going to write.
I needed to return 24 rolls of wallpaper this week, 2 boxes with a total weight of c 24Kg. The online quote I got from Parcelforce for a collect and next day delivery was £44. For the same service, DPD quoted £20! I would have liked to support PF but not with that differential. With parcel freight being the future, this company needs to be a bit more competitive or it's going to start to lose out.
"The steady decline in the number of letters we send and receive is far from ideal for Royal Mail. But with the growing UK and International parcels businesses now delivering around 60% of total revenues, it should become less of a headwind.
Online shopping provides a steady tailwind to the parcels operations, and that has the potential to transform Royal Mail from staid former-public sector giant into a surprisingly modern growth story.
Royal Mail isn't the only player trying to get a slice of the online retail pie though. Deutsche Post, the big boy of European post, has stepped into the market through its acquisition of struggling UK Mail. That adds to pricing pressure in an already crowded sector.
Another problem is that new age competitors are far slicker operations than Royal Mail. The contrast between Amazon's robotic warehouses and Royal Mail's sorting offices is stark. If the group is to win in a highly competitive sector it needs to modernise, and at some pace.
The group has warned that the "industrial relations environment" could hamper the speed of change. The current pensions dispute will be a test case for whether Royal Mail and its workforce can find a harmonious way forward.
However, we feel Royal Mail has some unique advantages over rival postal operators.
It's by far the largest UK player, with over 50% of the parcel market, so can invest more in technology and service. The group is also proving unexpectedly successful internationally, and is expanding its footprint with acquisitions in Europe and the US. Profits are being supported by stripping out costs that developed over years of public ownership.
Assuming the pension situation resolves itself satisfactorily, the balance sheet is not overstretched, and the group trades on 11.9 times next year's earnings, below its historic average, with a prospective yield of 5.4%."
"A swift return to the @GB:UKX:FTSE 100 Index for LSE:RMG:Royal MailÂ remained on the cards today after a decent Christmas performance offered more evidence that the logistics giant is on the right track.Although shares fell back 2% in the wake of ..."
Amazon signed a 3 year deal with Royal Mail before xmas.
Many couriers only get around 75P per item if delivered. So no delivery , equals no money. It is hardly surprising that some will just zap item and leave it it if no one is in,or worse still, cannot find the address.
I work for Royal Mail and expect a cracking update on trading in a few weeks. Do think shares will hit £6 ,no I don't. £5 definitely possible.
On the CWU, pensions and strike related stuff. Pretty sure now an agreement will be announced shortly. The CWU and RM both know a to generous a pension agreement would end up just as unsustainable as the present one has.
Our costs are already there and we make good profits. A change in employment law for these smaller couriers and many will go under because of the added sick pay , holiday pay and pension costs, worth remembering.
Amazon is a retailer who uses their own warehousing and distribution (Amazon Prime). Amazon use "random" drivers, a la Uber, or even worse, as I have seen DOZENS of different drivers in unmarked cars and vans, many times old and beaten up, delivering Amazon parcels over the years.
RMG is a distribution company, they cannot generate end product sales and do not own the warehouses, and they are using a huge workforce with salaries, pensions and benefits, AND STRIKES, and offices and fleet of well maintained vans, all of which weigh heavily down on the BS.
RMG also have stiff competition from dozens of more efficient firms whereas Amazon face none in their distribution business, because , well, they own it!
You say Amazon can't handle their own success but RMG can cope with it all because they have to pay more staff?
You say your customers have to leave their porches open or leave notes for all to see. With Amazon you do it online and passers by can't just read the notes. I use Amazon and they leave it where I ask them , nobody else knows where.
RMG , in your opinion, will succumb to pressure from CWU because CWU is right and they are wrong?
AND the share price will hit £6 inJanuary.
Well , Happy Christmas Des. Santa's on his way , followed by the men in white coats. Speaking as a Prime user Amazon deliver on the following day, on time , every time, if it is a prime item. They leave it in my safe place if I am not at home, every time. They keep me up to date with tracking info.
On the other hand RMG leave a card say I have to collect it from a nearby depot at their convenience. If I'm lucky they complete the name on the parcel. I have had a case where they haven't done this so I go to get it and get told can't have it because I am not the addressee. It was my wife and if they had put her name on the card I would have got her to collect it.
Amazon incredible growth hits problems as they are not coping with the massive increase with online Sales. Now Mobile phone Ordering are increasing faster than PC sales increasing the pressure on delivers. Amazon and UKmail are diverting more and more Parcels through the national network. Royal Mail are overwhelmed by the amount they are receiving but with more feet on the ground they can cope more with large increases than the other Parcel firms.
2D barcodes and 24hr and 48hr tracking no signature doorstepping deliveries are really increasing profits. As a Postman have noticed a massive increase in people leaving their porches open or leaving notes where to deliver their items. First time deliveries increase efficiency and reduces Complaints.
The Royal Mail Bosses under pressure from such a large vote and a massive turnout for a yes Vote for Strike action will be more agreeing with CWU as they can see some leverage from turnover increase.
Already Large Sales of Land in London and many places through the UK, headline Profits will hit next year top line.
Any way I predicting by time Royal Mail announce their results in January we could be touching £5 and next year if a Agenda for Growth is agreed then £6 is achievable.
"I truly wonder if Labour do get into power their priorities will not be spending £4.5BN (present value) to re-nationalise Royal Mail , when the NHS and education ,police and every other major service is crying out for money, along with fixing the roads etc. Add the proposed £40BN ongoing from Brexit and all of a sudden its bottom of the list. "
Good afternoon Presneill31,
As I understand it its's not just RMG that Corbyn & co dream of nationalising if they ever manage to get their mitts on the levers of power. You have to add the likes of CNA, SSE, NG., UU the railway franchises and many other companies to their hairbrained schemes.
Then you have to wonder where the cash will come from to finance and run the plans of Corbyn & co and how long it will take the international bond and treasury markets to realise that these plans could never be adequately financed but will only result in sending the U.K. into early bankruptcy.
These things must be the stuff of nightmares to the man on the Clapham omnibus and us private investors who could quickly become destitute if these things happened.
I truly wonder if Labour do get into power their priorities will not be spending £4.5BN (present value) to re-nationalise Royal Mail , when the NHS and education ,police and every other major service is crying out for money, along with fixing the roads etc. Add the proposed £40BN ongoing from Brexit and all of a sudden its bottom of the list.
Would Labour want to take on the RM pension again too, I ask?
Sadly letter writing is in decline.
There's nothing like a letter or a real birthday or Christmas card.
It's a bit like reading a real book instead of a kindle.
Parcel business is up though and I really don't agree with the business of allowing other companies to cherry pick the parcel and letter business that they choose and leave the difficult or low profit stuff to RMG; that's not fair competition.
I too am out for the time being but probably for good for letter reasons as much as the strike! I cannot remember the last time I bought postage stamps and if I use a courier for a parcel it is not Parcel Force!!
Our local postman is however brilliant but only delivers circulars and bank statements, folk don't write letters anymore (only official ones) they write emails!! why cos they cost near nothing and get there within seconds and you can send the same email to hundreds of folk and for the same price as one email, no stamps, no envelopes or paper.SO NO PROFIT FOR RMG
As always DYOR
Its had a good run in the past few weeks and will be collecting the div (final and interim),but for me I will be out until we see the £4 sp again.The unions are only away for a while and nothing has been finalised.If labour get in (which looks likely,they will devour stocks like this...............
"Having seen off the "spivs and speculators", LSE:RMG:Royal Mail shares are back close to where they started their controversial stockmarket journey in 2013.It's been particularly painful progress this year for a multitude of reasons, mainly due ..."
"The pace of corporate reporting is beginning to slow, but there is still plenty to interest investors and some big dividends to be had.Monday 4 DecemberTrading StatementsRhythmOne, Character Group, MXC CapitalAGM/EGMMysale Group, Taptica ..."
Royal Mail Group PLC (LON:RMG) was among the top laggards on Footsie Friday as a heavyweight broker downgraded the shares to 'sell' from 'hold' and cut the target price.
Despite Moya Green, the chief executive, doing a fine job, operational challenges will become even more challenging over the next 12 months, reckons analyst Andy Chu.
READ: Royal Mail says industrial dispute could hit full year earnings as it reports lower first half profits
He thinks it will become trickier to modernise and take costs out of an already complex business in an environment where GDP growth is weak, and there is low visibility on business confidence post Brexit.
Also in the mix are generally higher wage bill pressures and an on-going mediation process with the unions over pay and pensions.
Falling profits year-on-year ...?
Chu reckons that given cost avoidance measures will be hard to execute over the next 12 months, he thinks that profits for the full year to March 2019 could fall year-on-year.
"We reduce our FY March 17/18 and FY March 18/19 EBIT post transformation costs by 0.5% and 5.1% respectively to £498.7m and £485m," he says.
"RMG is still in the early phases of transformation, and we think that shareholders are not at the top of the stakeholder list as the primary focus is on restructuring, employee wages and pensions and M&A."
Deutsche cut the target price to 359p from 450p.
Jefferies cuts target too ...
US house broker Jefferies, which rates the shares 'underperform', takes a similar view, saying an inflection point is approaching, as the labour dispute between the firm and the Communication Workers Union (CWU) comes back to the fore as mediation talks close.
It envisages an improved pension offer, costing £450mln per year, with wage rises at 3% per annum.
This results in a 15% cut to the broker's EPS (earnings per share) estimates, and a cut to the target price for the shares of 10% to 300p (from 330p previously).
German bank Berenberg goes the other way though, hiking its target to 415p from 375p, after the now private postal firm's good performance in the first half.
"The company did a much better job at driving volume growth in UK parcels and controlling costs than the market had expected," it said, but noted that the pay and pensions dispute, was as yet, unresolved.
In London, Royal Mail shares lagged 4.14% to 423.60p.
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