Postal trolley outside door
Royal Mail owner IDS reiterates full year and appoints new CEO / Image source: Adobe
  • Company ekes out first quarter revenue growth
  • Keeps adjusted profit target for year to March 2024
  • Group could be vulnerable to a break-up

Shares in Royal Mail owner International Distribution Services (IDS) have been on a tear over the last month, up nearly 40% following settlement of industrial action which has brought the company to its knees.

Further positive news was delivered on Thursday after the company said it remained on track to turn an adjusted operating profit in the year to March 2024 and appointed Martin Seidenberg (currently head of overseas delivery division GLS) as group chief executive. The shares gained 3.3% to 275.8p.


Global Logistics Services registered a 7.4% increase in revenue for the first quarter to 30 June with volumes up 4%, slightly ahead of expectations and some 58% above pre-pandemic trading. On a like-for-like basis growth was 5.3% in Euros.

Growth offset the impact of lower fuel surcharges and weaker freight revenues amid a ‘mixed’ economic backdrop across different markets.

The company said it was making investments in automation and other productivity measures to mitigate the anticipated impact on margins.

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While addressed letter volumes were more robust than anticipated and, aided by price actions, led to 1.7% growth in revenue, volumes remain around a third below pre-pandemic levels.

The company argued this highlighted the need for the government and the regulator to take ‘urgent action’.

Growth in GLS and letters pushed group revenue 0.3% higher for the quarter to £3 billion.


Czech billionaire and IDS’s largest shareholder Daniel Kretinsky has reportedly threatened to put the group into administration if the dispute with the unions could not be settled.   

Head of financial analysis at AJ Bell Danni Hewson asked whether the end of the dispute could presage more corporate activity.

Hewson commented: ‘Royal Mail owner International Distributions Services is at a critical juncture, and it feels telling the company has appointed the head of its overseas delivery operation GLS to lead the broader group.

‘With strikes no longer clouding the outlook, would now be a good time to consider splitting the two businesses?

‘It seems likely GLS could attract a higher market valuation as an individual business, its attractions no longer obscured by the legacy issues facing Royal Mail.

‘The latter include struggles in pushing through efficiency improvements, large pension liabilities and a fractious relationship with its workforce.’

Disclaimer: Financial services company AJ Bell referenced in the article owns Shares magazine. The author of the article (Martin Gamble) and the editor of the article (Ian Conway) own shares in AJ Bell.



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Issue Date: 20 Jul 2023