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Royal Mail (IDS) Shares Edged Lower on H1 Losses. What’s Next?

Simon Mugo trader
Updated 17 Nov 2022

The Royal Mail International Distributions Services PLC (LON: IDS) shares edged lower after the mail and parcels delivery company released its half-year 2022 earnings results. The company reported an operating loss of £163 million during the 26 weeks that ended on 26 September 2021.

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YOUR CAPITAL IS AT RISK. 68% OF RETAIL CFD ACCOUNTS LOSE MONEY.


Investors barely reacted to the news since many expected the company to report a much more significant loss following its earlier trading update released on 14 October 2022. Instead, the update indicated that Royal Mail had incurred a higher adjusted operating loss for the six months. 

Shareholders breathed a sigh of relief as the company’s reported an adjusted operating loss of £57  compared to the £404 million profit recorded in a similar period last year. However, the material-adjusted loss remained at £219 million versus the £235 million profit generated in a similar period last year. 

Royal Mail has been plagued with multiple strikes during the half-year period, which I have covered in depth here and here, but the company is charting a way forward out of its current mess. The company has plans to restructure the work contracts with its employees to make it more competitive in the very competitive parcel delivery market.

International Distribution Systems’ international subsidiary GLS remained profitable, and its revenues increased to £2.2 billion compared to the £2.01 billion generated in H1 2021. However, GLS’ operating profit fell slightly to £162 million versus the £169 million recorded last year. 

As I have mentioned above, Investors widely expected the half-year results hence the muted reaction to the report, given that most of the data met expectations. However, the markets are keener on the ongoing dispute between the company and the Communication Workers Union (CWU). 

The CWU has planned two days of national industrial action on Thursday, 24 and Friday, 25 November 2022, which coincides with the famous black Friday peak shopping days. As a result, Royal Mail is likely to incur more losses due to the strikes. Hopefully, the standoff with the CWU will be resolved before then.

*This is not investment advice. 

Royal Mail (IDS) share price.

The Royal Mail share price edged lower but was trading sideways following the release of its half-year results.

Simon has over six years of professional trading experience across FX, commodities and equities. He has a strong passion for financial markets and is particularly focused on price action trading