R oyal Mail has delayed its turnaround plan, suspended its dividend and scrapped its guidance for next year due to the “significant uncertainty” caused by the Covid – the crisis, sending its shares plunging.
The group said the outbreak will negatively impact profits in its UK and international businesses this year, with “key markets” such as Italy, France and Spain being hit particularly hard.
Royal Mail continues to expect underlying operating profits of £ 300 to £ 800 m for the current financial year, however the group has suspended guidance for 2020 – 2021 and all future periods, with delays to its turnaround “Journey “plan.
The former monopoly and one of the world’s oldest postal companies last May pledged to invest £ 1.8bn to transforms itself into a sustainable, profitable operation by 2024.
The company said it will now take longer than expected to achieve the targets laid out in its Journey 
plan.
The group has access to over £ 925 m in cash plus £ m in credit facilities.
Rico Back, Royal Mail’s chief executive, said:
We are putting the health and wellbeing of colleagues and customers first. At the same time, we are delivering the parcels and letters that are a lifeline for those who cannot leave their homes.
We are entering a period of significant uncertainty in a good financial position. We have a strong balance sheet. We have substantial levels of liquidity and low levels of debt. We are taking immediate steps to further reduce our costs and protect our cash flow.
Nicholas Hyett, an analyst at Hargreaves Lansdown, said:
Royal Mail is in a better position than some companies, in that its core letters and parcels business does at least continue to operate. The increase in online shopping is even providing a boost to some parts of the business.
However, the significant falls in overall postal volumes both in the UK and internationally are expected to decimate profits this year and the group is nursing cash flow through the lean times, with the result that the full year dividend has been scrapped.
Shares fell 27. 1pc to p. The stock has lost almost a quarter of its value in the last month.
GIPHY App Key not set. Please check settings