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Postal Services Company Royal Mail Plc has announced the Group Chief Executive Officer Rico Back’s decision to step down from his role with immediate effect. Keith Williams would now be seen as an interim Executive Chair at the helm of the leading European parcels company Royal Mail, whereas Stuart Simpson would be taking up the role of company’s Chief Executive Officer in an interim capacity.
The company has also unveiled its decision to suspend the bonuses of the Executive Directors for the year 2019-2020. It has rather set aside a cash of around £25 million to award frontline workers in recognition of their diligent contribution in the fight against the COVID-19. The news sent the Royal Mail’s stock price to spike up by 8.38 percent intraday to end the week at GBX 175.95 on May 15.
Rico Back, who joined Royal Mail in 1989 under parcels operation, stated that it has been an honour to lead a company which is presently such a crucial part of UK life in this historical emergency. He added that he hopes to look forward Royal Mail growing into a parcels-led, international delivery company that continues to bring a constructive impact on millions of lives across the globe.
Let’s talk about the Royal Mail’s latest trading updates and coronavirus impact on the business as reported by the company in a media release dated 15 May 2020.
- The UK Parcels, International & Letters revenue of the company decreased to £22 million in April 2020 for year on year basis.
- But the UK Parcels volume has increased by 31 per cent, leading to 20 per cent rise in revenue due to a significant switch from letter to parcels in the United Kingdom.
- The UK Parcels, International & Letters cost increased to £40 million, reportedly due to high level of absence, social distancing measures and PPE to follow which altogether resulted in agency’s increased resource costs with overtime.
- As per the company information, the liquidity position is robust. However, the company has the potential to access the Coronavirus Corporate Financing Facility (CCFF), if necessary.
- During the novel coronavirus situation, the company will continue to supply its services to 30 million families throughout the United Kingdom. The company is playing an active role by delivering Home testing kits and government information.
- As per the company information, less than 200 staff are put on furloughing scheme of the UK government.
- After taking employees feedback and shift to parcels from letters, the company has introduced a temporary reduction of the Universal Service, with five-day letter distribution.
Overview of the Royal Mail Plc - Royal Mail Plc (LON:RMG) is an international postal services company which delivers parcels, letter, and new products. The company is working in 44 nations throughout the globe with 41 in Europe. After the acquisition, it is also operating in eight states of the Western US and Canada. The company employs approximately 0.16 million individuals throughout the group, and around 0.14 million are working in the United Kingdom.
The share price performance of the company – RMG stock last traded at a price of GBX 175.95 on Friday. The company has a market capitalisation of GBP 1.76 billion with 1.00 billion of shares outstanding. Annual dividend yield of the company is presently recorded at 13.92 per cent with a stock’s beta standing at 1.23, reflecting higher volatility compared to the benchmark.
Coronavirus and Change in Managerial Structure of the Companies
To date, World Health Organisation has reported a 4.39 million cases of coronavirus globally. The United Kingdom is the third nation after the United States and Russian Federation that have highest number of COVID-19 cases with drastic increase in infection rate. The impact of novel coronavirus could be felt on almost all the parts of the world with the business feeling the brunt in the face of revenue loss, cash burns and even survivals in some cases.
Bosses of globally renowned companies have announced their resignation in 2020
There are many companies that have slashed the dividend payments and executive bonuses to hold on the cash that would expectedly be needed in the long term to support the economy. Amid such a scenario, a lot of senior level management personnel and chief executives have put their papers down for one or the other reasons, significantly adding to the matrix of changing business landscape. Let’s take a glimpse of the CEO’s who have either resigned or have had the change in the business structuring.
- Bob Iger – The Ex-Chief Executive Officer of Walt Disney had resigned from the company during February 2020. Bob had been with Disney for around 30 years and worked as a CEO for over 14 years. However, months after his resignation from the role of CEO, Bob Iger has returned to running the company in the role of Executive Chairman now.
- Matt Levatich – The Ex-President and Ex-Chief Executive officer of Harley-Davidson had stepped down during the end of February 2020. As per the media report, the sale of the bikes in the United States decreased in the fifth straight year in 2019.
- Tidjane Thiam – The Ex-Chief Executive Officer of Swiss Bank Credit Suisse had resigned from the company in February 2020. His resignation came in after a damaging spying scandal dented the bank’s reputation while Thiam was clear in an internal investigation.
- Leslie Wexner – The 82-year old American billionaire and Ex-Chief Executive Officer of L Brands, Leslie Wexner announced its resignation during February 2020. Leslie Wexner decided to step down from the role of L Brands’ CEO after the company sold off its struggling Victoria’s Secret Chain to Sycamore Partners at $1.1 billion.
The impact of novel coronavirus is taking varied forms and shapes in the economic cycle of the country. With such a backdrop, it would be interesting to see that how the Prime Minister’s three-phase lockdown easing program would provide impetus in the business activities of the companies in order to bring back lives to normal again.
