TIDMIDS
RNS Number : 8916N
International Distributions Svc PLC
26 January 2023
International Distributions Services plc
(Incorporated in England and Wales)
Company Number: 8680755
LSE Share Code: IDS
ISIN: GB00BDVZYZ77
LEI: 213800TCZZU84G8Z2M70
26 January 2023
TRADING UPDATE FOR THE NINE MONTHS TO OF DECEMBER 2022
International Distributions Services plc (IDS.L) is today
providing an update on trading for the nine months to the end of
December 2022.
Royal Mail:
-- Revenue down 12.8% year on year in the nine-month period.
Performance continues to be driven by a return to structural
decline in letters, weaker retail trends, the impact of industrial
disruption (18 strike days year to date), and lower test kit
volumes;
-- Total letter revenue declined 6.1% year on year, with volumes
for addressed letters excluding elections down 8%;
o Compared to pre-pandemic levels (9M 2019-20) addressed letter
volumes (excluding elections) were down 25% and total letter
revenue down 14.0%, reflecting the fundamental change in volume and
revenue mix - parcels now 54% of total revenue vs. 48% pre-pandemic
- highlighting the urgent need to deliver change;
-- Total parcel revenue reduced by 17.8% year on year, with
volumes down 20% (revenue growth of 8.6% and volume decline of 6%
vs. pre-pandemic 9M 2019-20);
-- Year to date adjusted operating loss of GBP295 million. Net
cost of strike action in the nine-month period estimated at c.
GBP200 million;
-- Five-point plan to stabilise the business making good progress and on track;
-- Number of voluntary redundancies required to achieve the
10,000 FTE (Full Time Equivalent) reduction by August 2023 will be
significantly lower than the 5,000-6,000 communicated in October as
a result of strong performance in reducing variable FTE resource
and current levels of attrition. On track for 5,000 FTE reduction
by March 2023. No compulsory redundancies.
-- Effective contingency measures: despite seven days of
industrial action in December, robust contingency planning meant in
excess of 110 million parcels and over 600 million addressed
letters delivered. Up to c. 12,500 CWU grade employees returned to
work on strike days.
GLS:
-- Volume declined 2% year on year in the nine months; revenue
growth of 9.7% in Sterling, 9.6% in Euros (including acquisitions
and working day effects)(1) , continuing to benefit from better
pricing and higher freight revenues;
-- Adjusted operating margin for the nine months 7.5%, 100 bps below prior year;
-- Continued robust performance against challenging
macro-economic backdrop. Revenue growth in almost all markets, but
continued cost pressures, being partly offset by a combination of
specific pricing actions, service quality and targeted efficiency
measures.
Outlook:
-- Royal Mail FY 2022-23: Whilst 18 days of strikes is six more
than was previously anticipated in our outlook, we expect an
adjusted operating loss around the mid-point of the existing GBP350
million to GBP450 million range, due to tight control of costs and
strike contingency measures. This assumes no further days of strike
action in Q4 and the CWU accept a pay settlement in line with the
best and final pay offer. The full year outturn will also be
subject to potential customer attrition in Q4 and excludes any
charges for voluntary redundancy costs. Continue to expect that the
GBP925 million bank syndicate loan facility will remain undrawn
during the remainder of the current financial year.
-- Ongoing industrial dispute further increases the risk of
impairment of the carrying value of the Royal Mail cash generating
unit (CGU)(2) , which was GBP1,412 million at 25 September 2022.
Any impairment charge would be classified as a non-cash specific
item, and reflect the losses being incurred within the Royal Mail
business. An update on the outcome of the impairment review will be
provided as part of our full year results announcement.
-- Royal Mail FY 2023-24: Given the ongoing industrial dispute,
we now expect negative in-year trading cashflow, and thus
generation of positive free cash flow will require support from the
proceeds of asset disposals. Continue to target return to adjusted
operating profit in FY 2024-25.
-- GLS: FY 2022-23: maintaining guidance for revenue growth year
on year of high single digit % and adjusted operating profit in the
range EUR380 to EUR400 million (previously EUR370 to EUR410
million).
PERFORMANCE FOR NINE MONTHS TO OF DECEMBER 2022
9 months ended December % change(5)
2022 vs. 2022 vs
Volume (m) 2022 2021 2019 2021 2019
--------- --------- --------
Royal Mail
Total Parcels 934 1,163 996 (20)% (6)%
--------- -------- ------- --------- --------
Domestic
Parcels (ex. international)(4) 8 21 1 ,044 7 86 (21)% 5%
--------- -------- ------- --------- --------
International(6) 1 13 1 20 2 10 (6)% (46)%
--------- -------- ------- --------- --------
Addressed
Letters (ex. elections) 5 ,498 6 ,001 7,350 (8)% (25)%
--------- -------- ------- --------- --------
GLS 643 656 499 (2)% 29%
--------- -------- ------- --------- --------
9 months ended December % change(5)
2022 vs.
Revenue (GBPm) 2022 2021 2019 2021 2022 vs 2019
-------- --------- -------------
9,10
Group(3) 5 9,626 8,201 (5.4%) 11.0%
-------- -------- -------- --------- -------------
5,66
Royal Mail 3 6,494 5,853 (12.8%) (3.2%)
-------- -------- -------- --------- -------------
3,03
Total Parcels 5 3,694 2,795 (17.8%) 8.6%
-------- -------- -------- --------- -------------
Domestic
Parcels (ex. international)(4) 2,490 3,076 2,143 (19.0)% 16.2%
-------- -------- -------- --------- -------------
International(6) 544 618 651 (12.0)% (16.4)%
-------- -------- -------- --------- -------------
Letters 2,629 2,801 3,058 (6.1)% (14.0)%
-------- -------- -------- --------- -------------
GLS 3,455 3,149 2,379 9.7% 45.2%
-------- -------- -------- --------- -------------
PERFORMANCE FOR THE THIRD QUARTER (OCTOBER TO DECEMBER 2022)
3 months ended December % change(5)
2022 vs. 2022 vs
Volume (m) 2022 2021 2019 2021 2019
-------- --------- --------
Royal Mail
Total Parcels 321 439 382 (27)% (16)%
-------- -------- -------- --------- --------
Domestic
Parcels (ex. international)(4) 282 398 300 (29)% (6)%
-------- -------- -------- --------- --------
International(6) 39 40 82 (3)% (52)%
-------- -------- -------- --------- --------
Addressed
Letters (ex. elections) 1,900 2,185 2,619 (13)% (27)%
-------- -------- -------- --------- --------
GLS 232 239 179 (3)% 30%
-------- -------- -------- --------- --------
3 months ended December % change(5)
2022 vs.
Revenue (GBPm) 2022 2021 2019 2021 2022 vs 2019
-------- --------- -------------
Group(3) 3,268 3,554 3,035 (8.1)% 7.7%
-------- -------- -------- --------- -------------
Royal Mail 2,016 2,420 2,204 (16.7)% (8.5%)
-------- -------- -------- --------- -------------
Total Parcels 1,059 1,386 1,068 (23.6)% (0.8%)
-------- -------- -------- --------- -------------
Domestic
Parcels (ex. international)(4) 855 1,164 809 (26.6)% 5.6%
-------- -------- -------- --------- -------------
International(6) 204 221 259 (7.8)% (21.1)%
-------- -------- -------- --------- -------------
Letters 957 1,035 1,136 (7.5)% (15.7)%
-------- -------- -------- --------- -------------
GLS 1,255 1,139 842 10.2% 49.0%
-------- -------- -------- --------- -------------
1. Revenue growth year on year in Euros was 7.2%, adjusting for
the impact of acquisitions and working day effects.
2. Excluding Parcelforce Worldwide (which is already fully impaired).
3. Royal Mail and GLS revenue does not equal Group revenue due
to the elimination of intragroup trading.
4. Domestic Parcels excludes import and export for both Royal Mail and Parcelforce Worldwide.
5. % changes based on reported numbers.
6. International includes import and export for Royal Mail and Parcelforce Worldwide.
Enquiries:
Investor Relations
John Crosse
Email: investorrelations@royalmail.com
Media Relations
Jenny Hall
Phone: 07776 993 036
Email: jenny.hall@royalmail.com
Royal Mail press office: press.office@royalmail.com
Company Secretary
Mark Amsden
Email: cosec@royalmail.com
FORWARD-LOOKING STATEMENTS
This document contains certain forward-looking statements
concerning the Group's business, financial condition, results of
operations and certain Group's plans, objectives, assumptions,
projections, expectations or beliefs with respect to these items.
Forward-looking statements are sometimes, but not always,
identified by their use of a date in the future or such words as
'anticipates', 'aims', 'due', 'could', 'may', 'will', 'would',
'should', 'expects', 'believes', 'intends', 'plans', 'potential',
'targets', 'goal', 'forecasts' or 'estimates' or similar
expressions or negatives thereof.
Forward-looking statements involve known and unknown risks,
uncertainties and other factors, which may cause the Group's actual
financial condition, performance and results to differ materially
from the plans, goals, objectives and expectations set out in the
forward-looking statements included in this document.
All written or verbal forward-looking statements, made in this
document or made subsequently, which are attributable to the Group
or any persons acting on its behalf are expressly qualified in
their entirety by the factors referred to above. Accordingly,
readers are cautioned not to place undue reliance on
forward-looking statements. No assurance can be given that the
forward-looking statements in this document will be realised;
actual events or results may differ materially as a result of risks
and uncertainties facing the Group. Subject to compliance with
applicable law and regulation, the Group does not intend to update
the forward-looking statements in this document to reflect events
or circumstances after the date of this document, and does not
undertake any obligation to do so.
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END
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