Royal Mail parent IDS to deliver breakeven and small dividend

By Yadarisa Shabong

(Reuters) – Royal Mail owner International Distributions Services expects the group’s full-year adjusted operating performance will be around breakeven, after previously predicting a profit.

It said, however, it expected to pay a modest dividend generated by its international parcels unit GLS, without specifying the amount, after paying no dividend last year.

Shares fell 2.5% in early trading.

In July, IDS had said it expected to return to profit at the group level in the fiscal year ending March, while the Royal Mail unit was expected to become profitable in the next fiscal year.

Royal Mail had suffered setbacks over the last year, including strikes by postal workers, a cyber security incident, a fine from regulator Ofcom for missed delivery targets and the loss of its 360-year monopoly to deliver parcels from post office branches.

Martin Seidenberg became group CEO in August and took on the task of setting a new strategic direction for IDS.

Having cut costs and spending and reduced the number of projects at the group to bolster its cash position, Seidenberg said in a call with journalists he was turning his focus to quality.

IDS shares lost nearly 58% of their value last year, when strikes disrupted deliveries and led to loss of market share.

“We are seeing that volumes are flowing back to us. So, since the industrial action, most of the customers that gave the volumes to other competitors have come back,” Seidenberg said.

IDS, which owns Royal Mail in the UK and GLS, reported a group adjusted operating loss of 169 million pounds ($209.41 million) for the six months ended Sept. 24, compared with 57 million pounds a year earlier.

IDS’s group revenue eked out a 0.4% rise in the first half, as a 5.9% growth at GLS was offset by weakness at Royal Mail, whose parcel revenues fell by 6.2%.

($1 = 0.8070 pounds)

(Reporting by Yadarisa Shabong in Bengaluru; Editing by Rashmi Aich, Sohini Goswami and Barbara Lewis)