Royal Mail was the FTSE 100's biggest loser this morning, as its stellar recent form was dented by a gloomy City warning on the fall out from changes to European data laws.
The postal giant fell as much as five per cent as markets opened as General Data Protection Regulation (GDPR) comes into play today.
Analysts from Berenberg issued a note warning on growth and profit risks.
Royal Mail's letters division, which represents roughly half of the firm's top line, is in seemingly terminal decline. The only bright light in recent years has been revenue generated from marketing mail, which grew by one per cent over the last year, netting the firm £1.1bn in sales.
The eagerly anticipated GDPR changes are an attempt by EU regulators to give citizens more rights in how their personal information is used. Under the changes, businesses with any footprint in the European bloc must get express consent to collect such data. This will have an impact on firms hoping to market to customers through postal services.
Last week Royal Mail said marketing mail revenues "may decline" as a result of the regulation from Brussels.
Slashing its recommendation to "sell", Berenberg estimated the rule changes will see £80m sliced off the firm's revenues.
Berenberg analyst Joel Spungin said:
We think the risks to Royal Mail’s growth and profitability outlook are increasing once again. Regulatory change presents another headwind for mail volumes, while intense competition threatens revenue growth in parcels. Combined with various other cost pressures, we see little profit growth over the next three years.
Royal Mail has added more than £2bn to its market value since last November. Last year the firm's progress was hampered by a protracted pay and pension dispute with workers. But investors were buoyed by strikes being averted and a deal being struck earlier this year.