Royal Mail shares plunge to new low

Royal Mail's Stephen Foster helping to sort the incoming mail at Leeds Royal Mail Centre in Stourton. Picture: James Hardisty

Shares in the group tumbled as much as 11 per cent at one stage after cautioning over a “challenging” year ahead as it remains locked in an unresolved dispute with staff that is delaying its turnaround plan.

It revealed the industrial action fears had already hurt demand for parcel deliveries over the crucial Christmas season as some customers switched to rivals.

The group said the row with the Communications Workers Union (CWU), together with ongoing Brexit uncertainty, “increases the likelihood” of losses in 2020-21 for its UK letters and parcels business.

Unless it makes “significant progress” on overhaul efforts, the group cautioned it was at risk of missing targets under the plan.

Chief executive Rico Back vowed to push ahead with the turnaround despite the CWU threats. He said: “We are disappointed that the CWU has issued a timeline for a ballot of its members for industrial action.

“We stand ready to invest £1.8bn to modernise and grow in the UK. We want to reach agreement with CWU; but we cannot afford to delay this essential transformation any longer.”

Royal Mail won a legal battle in November to prevent a postal strike in the run up to Christmas and the general election. But the dispute with the CWU is ongoing amid worker concerns over job security and widespread changes under Mr Back’s overhaul.

In its update, Royal Mail said the underlying decline in letter mailings did not ease as expected.