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Royal Mail (Business (UK Network (Utilizing existing network, not building…
Royal Mail
Business
UK Network
Utilizing existing network, not building new.
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Segments
UKPIL
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37 mail centres, 1350 delivery offices, 11,400 collection locations, 48000 vehicles.
GLS
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"One of the largest ground-based parcel delivery networks in continental Europe" covering 41 european countries
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Germany, France and Italy now make up 60% of GLS revenue
70 network hubs, 1300 depots, 18000 parcel shops
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Operate in 43 countries under Royal Mail and Parcelforce Worldwide brands.... targeting expansion in Europe through organic expansion and in the US through acquisitions. As of March 2018, 38% of revenue was non-UK based.
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Risks
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Unions
In Feb 2018 announced agreement with Communication Workers Union (CWU) on pensions, pay and shorter work weeks.
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"Significant one-off cash payment relating to pay deal last year, the payment of 100M lump sum to our people included within that.
Rising costs
... they set a target of 230M of cost savings for 2018-2019. Had to reduce to 100M target because of higher front line hours.
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aCQUISITIONS
Had to write down 85% of the value of two recently acquired US businesses.... paid 80M pounds for GSO and Postal Express. They were purchased in 2016 and 2017. There was a 68M pound write down last year.
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Management
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New CEO is Rico Back... He owns 1.3M worth of shares....he bought 550K in December, 192,500 worth of shares on Nov 20, 458L on Nov 19, 200K in august, 350K in June
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Industry
"UK Consumers are spending more online per head than in any other major market, including the US and China
Royal Mail owns 53% of total market share by volume.... this addressible market is growing at 3%/year
In letters, forecasting 4-6% decline/year in volume.... Letter volume is around 50% of peak volume in 2004.
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