Royal Mail share price closes lower as analysts flag strike concerns
Royal Mail topped the FTSE 100 faller list as it prepares to drop out of the top-flight index
by Abi Moses on 7th September, 2017
Shares in Royal Mail Group, the British postal service and courier company, closed more than 1% lower in London yesterday, pressured by pessimistic comments by investment bank, .
The news comes amid concerns over industrial action against the postal operator, as they are still trying to reach a deal with staff over its revised pension plan. Royal Mail is currently trying to replace its defined benefit pension scheme with an alternative plan.
Royal Mail’s share price () fell 1.7% on Monday, eventually closing at 386p. Following their poor performance, Royal Mail topped the FTSE 100 faller list, on continuing disappointment at the loss of its blue-chip status from next week.
In the past year, the group’s shares have lost more than a quarter of their value, currently down by some 16% in the year-to-date. Therefore, reiterated its ‘sell’ rating on Royal Mail, with a price target of 385p on the shares.
In their notes to clients, analysts at Capital highlighted: "The risks of industrial action at Royal Mail are rising" adding that the "CWU, which represents the bulk of frontline staff, has been running an extensive grassroots campaign to build support for industrial action. We understand the union could propose a ballot for industrial action as early as tomorrow."
In Capital’s view, "the risks from industrial action lie predominantly in the likely modification of customer behaviour in the longer term, accelerating e-substitution in letters and the loss of market share in parcels."
They continued: "We also believe productivity improvements would be harder to deliver against an adversarial backdrop to industrial relations."
The privatised postal operator will be dropping out of the FTSE 100 Index next Friday, nearly four years since its float on the London Stock Exchange.
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