• Investing
  • Stock
Round Table Thoughts
  • Economy
  • Editor’s Pick
Home Investing IDS share price is at risk amid rising Royal Mail bankruptcy fears
Investing

IDS share price is at risk amid rising Royal Mail bankruptcy fears

by December 22, 2022
by December 22, 2022 0 comment
Share
0
FacebookTwitterPinterestWhatsapp

IDS (LON: IDS) share price has been in a freefall in 2022 as the company fights for its life. The stock of Royal Mail’s parent company plunged to a low of 174.3p in October, which was about 67% below the highest level this year. Its market cap has plunged to about £2 billion.

Royal Mail could go bankrupt

International Distributions Services is the parent company of Royal Mail and GLS. The firm, which was a former monopoly, has had a difficult year this year as demand for its services increased and competition rose. 

It has also contended with stubborn workers who have been staging walkouts recently. They went to strike this week, a period that is expected to be busy for the letter and delivery company. Employees want better salaries as UK’s inflation remains at a multi-decade high.

IDS’s management has said that it will be almost impossible to hike wages considering that the firm’s business was seeing low demand. And in a letter seen by the Financial Times, the CEO asked the workers to join the management in saving the company. 

The management has also hinted that it will separate its business into two. In this case, the profitable GLS division will become separate from the loss-making Royal Mail. The current structure means that GLS typically helps to run the operations of the broader company.

Loss-making entity

Royal Mail share price also plunged as demand for its letters and parcel business dwindled after doing well during the pandemic. As a result, the company has moved into a loss-making territory. The management has warned that the company was losing £1 million per day.

The most recent results showed that the company’s revenue in the first half of the year dropped by 3.9% to £5.3 billion. Its loss before tax widened to £127 million. Its GLS revenue rose by 9.5% to £2.2 billion. It expects that its full-year loss will be over £450 million. The CEO said:

“GLS has adapted well to inflationary pressures across its geographies. However, we have been standing at a crossroads with CWU in the UK for several months. We are now heading in a clear direction in light of the substantial losses in Royal Mail.”

Worse, the company’s letter business is struggling as the number of people sending mail dwindled. The company is still mandated to deliver letters six days per week

Therefore, analysts warn that Royal Mail could go bankrupt in the coming months unless serious changes happen. They note that Royal Mail has over 158k employees, which is higher than similar companies of its size.

Therefore, in light of this crisis, it would be hard to recommend IDS as a valuable investment. Its business will continue struggling as the strikes continue. Also, as I wrote here, analysts warn that separating GLS from Royal Mail will not be easy because of how integrated the two businesses are.

The post IDS share price is at risk amid rising Royal Mail bankruptcy fears appeared first on Invezz.

You Might Also Like
  • Unemployment rate falls to 3-month low in Japan; Monthly retail sales slow
  • Chevron will still be drilling in 2050: CEO Mike Wirth
  • Centrica share price rally has more room to run – analysts
  • Pro: buying Peloton stock is ‘absolute nonsense’
Share
0
FacebookTwitterPinterestWhatsapp

previous post
Is Micron stock a ‘buy’ despite weak guidance?
next post
25+ incredible oil industry statistics & facts from 2022

You may also like

Is Lululemon Athletica eyeing a Santa Claus rally to the...

December 7, 2022

Cramer recommends caution as stocks rally on inflation data

December 13, 2022

OptionNET Explorer (ONE) Software

March 19, 2023

JPMorgan stock double upgraded to ‘overweight’ at Morgan Stanley

December 6, 2022

Long Straddle Options Strategy: The Ultimate Guide

March 27, 2023

NASDAQ 100 2023 forecast amid investors pulling record funds out...

January 4, 2023

A Standoff over Gas Price Cap Puts on Hold EU...

November 25, 2022

Shell vs BP: Which is a better oil and gas...

December 9, 2022

SteadyOptions 2023 – Year In Review

January 5, 2024

Lloyds Bank share price forecast for 2023

January 2, 2023

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Krispy Kreme stock plunges after doughnut chain pauses McDonald’s rollout, pulls outlook

      May 8, 2025
    • Don’t Buy Robinhood Stock… Until You See This Chart Setup

      May 8, 2025
    • UnitedHealthcare sued by shareholders over reaction to CEO’s killing

      May 8, 2025
    • The Unpredictable Stock Market: How to Make Sense of It

      May 8, 2025
    • AMD CEO calls China a ‘large opportunity’ and warns against strict U.S. chip controls

      May 7, 2025

    Popular Posts

    • 1

      Trump-era China sanctions ended by Biden may be...

      June 27, 2024 2,630 views
    • 2

      Walz’s honeymoon with China gets fresh scrutiny as...

      August 9, 2024 2,339 views
    • 3

      Biden appointee played key role in recruiting Chinese...

      June 25, 2024 2,320 views
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful...

      July 10, 2024 2,302 views
    • 5

      Harris VP pick spent years promoting research facility...

      August 29, 2024 2,186 views

    Categories

    • Economy (7,009)
    • Editor's Pick (2,066)
    • Investing (538)
    • Stock (2,530)

    Popular Posts

    • 1

      Trump-era China sanctions ended by Biden may be revived under new House GOP bill

      June 27, 2024
    • 2

      Walz’s honeymoon with China gets fresh scrutiny as Harris camp blasts ‘lying’ critics

      August 9, 2024
    • 3

      Biden appointee played key role in recruiting Chinese businesses to Delaware: ‘Longtime friends’

      June 25, 2024
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful of Chinese spy threats

      July 10, 2024
    • 5

      Harris VP pick spent years promoting research facility that collaborated with ‘Chinese military company’

      August 29, 2024

    Latest News

    • Krispy Kreme stock plunges after doughnut chain pauses McDonald’s rollout,...

      May 8, 2025
    • Don’t Buy Robinhood Stock… Until You See This Chart Setup

      May 8, 2025
    • UnitedHealthcare sued by shareholders over reaction to CEO’s killing

      May 8, 2025

    Categories

    • Economy (7,009)
    • Editor's Pick (2,066)
    • Investing (538)
    • Stock (2,530)

    Disclaimer: RoundTableThoughts.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2024 RoundTableThoughts.com. All Rights Reserved.

    Round Table Thoughts
    • Investing
    • Stock
    Round Table Thoughts
    • Economy
    • Editor’s Pick

    Read alsox

    Houlihan Lokey: The best bank stock...

    December 20, 2022

    Wide, flat SPX Diagonal Spread

    January 16, 2023

    Is it safe to buy Baron...

    December 27, 2022
    Sign In

    Keep me signed in until I sign out

    Forgot your password?

    Password Recovery

    A new password will be emailed to you.

    Have received a new password? Login here