The FTSE 250-listed Royal Mail, owned by International Distribution Services PLC (GB:IDS), has been hit with a fine of £10.5 million for a shortfall in achieving its delivery targets. According to the UK’s communications regulator, Ofcom, Royal Mail delivered 74.7% of first-class mail and 92.7% of second-class mail on time in FY23/24. These numbers fell short of the regulator’s yearly targets of 93% and 98.5%, respectively. Additionally, this marks the second time the company has been penalized by the regulator since the pandemic.
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IDS is a British distribution company, offering postal and courier services through its brands Royal Mail, Parcelforce, and GLS.
Royal Mail’s Delivery Failures Spark Growing Distrust
Ofcom stated that the continued delivery failure by Royal Mail is now undermining public confidence in one of the UK’s most historic institutions. Meanwhile, Ofcom dismissed Royal Mail’s claim that financial challenges and delays from industrial action justified its poor performance, stating that the company failed to take adequate measures to resolve service issues.
While Royal Mail has submitted an improvement plan and Ofcom noted some signs of progress, the regulator believes the company needs to accelerate its efforts to improve its service.
Royal Mail is already under investigation by Ofcom, which was announced in May 2024.
Royal Mail’s Takeover Nears Completion
The fine comes as IDS is in the midst of selling its Royal Mail postal brand to Czech billionaire Daniel Křetínský. In May 2024, IDS approved Křetínský’s EP Group’s offer of 370p per share, and the transaction is now under government review.
Given the company’s declining performance, Křetínský is expected to prioritize strengthening Royal Mail’s parcel delivery division.
What Is the Forecast for IDS Share Price?
According to TipRanks, IDS stock has received a Hold rating, backed by one Hold recommendation from Deutsche Bank. The IDS share price target is 368.11p, which is 3% above the current trading levels.
Year-to-date, IDS stock has gained 31% in trading.
