IDS (LON:IDS) has reported first-quarter Group revenue of £3.0bn, up 0.3% year-on-year, and remains on track to deliver underlying operating profit for the year.
Royal Mail saw revenue fall 4.0% to £1.8bn, in line with expectations. Volumes were down across the board but strong pricing in letters led to revenue growth from that segment.
GLS saw revenue rise 7.4% to £1.2bn, with volumes slightly better than expected up 4%. Automation and productivity improvements remain in focus to help offset margin pressures.
Martin Seidenberg has been appointed as Group CEO of IDS, he will be appointing CEOs for Royal Mail and GLS in due course.
IDS’ Robust Performance
“When you consider the turmoil that’s plagued Royal Mail over the past year or so, with persistent strikes and lacklustre performance, it’s still a little surprising to see updates with no major issues. But don’t confuse the lack of any major issues with a business that’s delivering on all cylinders, at this stage just one cylinder would be welcome – but we’re not there yet.
The positive CWU vote earlier in the month paves the way for a recovery and should all but extinguish the chances of further strikes – but now the real work begins. Parcel and letter volumes continue to be on a downward trend and the business is expected to be heavily loss-making this year.
IDS, Royal Mail’s parent, has more to cheer about as Martin Seidenberg is moving into the top seat from his previous position at GLS which looks a good appointment. GLS, the group’s international logistics business, continues to put in a robust performance and remains on track to drag IDS to an underlying operating profit at the full year. Investment, which was previously stacked toward Royal Mail, will swing further in GLS’s favour as automation is in focus – a sensible move for the long term.”
Article by Matt Britzman, equity analyst at Hargreaves Lansdown
