Royal Mail's profits expected to decline as bid to stop Christmas strike continues

Alys Key
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Christmas Post Leaves Glasgow On The Royal Mail Train
Royal Mail is engaged in talks to avoid a Christmas strike (Source: Getty)

Royal Mail's profits are set to drop as it reports half-year results this week under a cloud of threatened strike action.

Analysts at Jefferies expect that profits will be down 15 per cent to £270m.

Meanwhile analysts at Hargreaves Lansdown were more optimistic, hoping for a "business as usual" update that would keep shareholders happy. But cost cutting will remain in the spotlight, with headwinds expected from the current pension dispute.

Read more: Royal Mail promises to up its game after missing delivery targets

Royal Mail's share price has dropped to 378.3p this year, not far off its 2013 float price of 330p.

It continues to face the threat of further industrial action, though recently won a legal ruling to block strikes at Christmas until further talks can take place.

Professor Lynette Harris has now been appointed to mediate talks between the two parties, in line with a pre-agreed dispute resolution procedure. This process, which must be a minimum of seven weeks long, significantly reduces the chance of industrial action over the Christmas period.

But analysts at Liberum said that there is still downside risk for Royal Mail "from either higher costs to settle the dispute or the threat of disruption encouraging customers to seek alternatives (especially online retailers)".

Read more: Moya to the rescue: Royal Mail boss intervenes to avert Christmas strikes

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