Wealth Manager - the site for professional investment managers

Register to get unlimited access to all of Citywire’s Fund Manager database. Registration is free and only takes a minute.

Royal Mail's shock delivery weighs on FTSE

Royal Mail's shock delivery weighs on FTSE

A slump in Royal Mail's share price as it announced its first set of results has weighed on a flat FTSE 100.

Royal Mail (RMG) fell 49p, or 8.5%, to 526p as it reported a 12% rise in profits but delivered a stark warning about competition in the postage sector. The FTSE 100 shed four points to stand at 6,817.

Royal Mail chief executive Moya Greene said the group's letters business could suffer if regulator Ofcom did not intervene with rival TNT Post UK's plans to roll out a direct mail delivery service.

'Our analysis is that, without timely intervention from the regulator, direct delivery competition will have a serious impact on the sustainability of the universal service,' she said. 'This is why we are preparing a regulatory submission calling on Ofcom to take action now and carry out a full review of direct delivery. At the same time, we are raising the issue with HM Government and are seeking a legislative amendment that would require a review of direct delivery if Ofcom does not initiate one in a timely manner.'

Royal Dutch Shell's 'B' class shares (RDSb) slid 106p, or 4.2%, to £24.46, as the petrol giant scrapped its scrip dividend policy that has favoured those class of shares. Tax reasons have meant that Shell has effectively been limited to repurchasing only 'B'-class shares, which has over time led to them trading at a premium. Today's move however brings the treatment of both share classes in line. The 'A'-class shares (RDSa) added 10.5p, or 0.4%, to £23.63.

Brewer SABMiller (SAB) was the biggest blue chip riser, advancing 125p, or 3.8%, to £33.86 after surprising investors with better-than-expected annual results for the year.

Miners traded higher as a private survey showed China's factory sector turned in its best performance in five months in May. Fresnillo (FRES) rose 23p, or 2.8%, to 852.5p; Antofagasta (ANTO) added 17p, or 2.2%, to 788p; while Petrofac (PFC) jumped 19p, or 1.6%, to £12.39.

British American Tobacco (BATS) climbed 44.5p, or 1.3%, to £35.70 on news it could back a potential merger between Reynolds American and Lorillard.

Minutes from the US meeting of Federal Reserve policymakers released overnight also provided a boost, dispelling any fears of imminent interest rate rises.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play JPM’s Negyal: Back divis to temper EM volatility

JPM’s Negyal: Back divis to temper EM volatility

Omar Negyal, co-manager of the JPMorgan Global Emerging Markets Income trust, says a dividend approach to emerging markets reduces the volatility of investing in the asset class.

Play WMR: Why Russia will lose this war

WMR: Why Russia will lose this war

Author and journalist Adam Lebor believes a perfect storm is brewing when it comes to the Russian economy. .

Play WMR: Gerard Lyons warns Asia is the real risk, not Russia & Ukraine

WMR: Gerard Lyons warns Asia is the real risk, not Russia & Ukraine

Chief economic adviser to London mayor Boris Johnson outlines the geo-political risks in Asia and explains why the risk of another eurozone crisis must not be underestimated.

Your Business: Cover Star Club

Profile: The adviser that tempted Robin Minter-Kemp on board

Profile: The adviser that tempted Robin Minter-Kemp on board

It is rare to meet an impassioned individual who is willing to bang the drum for investment advisory right now

Wealth Manager on Twitter