IDS share price: how strikes have impacted Royal Mail parent company’s stock price amid £1bn loss

International Distribution Services (IDS), the private company that owns Royal Mail, has reported that the delivery brand has wracked up losses of £1 billion over the past year.

Its financial results for the 2022/23 tax year show a £1.25 billion swing from the previous year, when it recorded a £250 million profit. IDS itself saw an overall loss of £748 million.

It comes after a torrid year for the company that has seen it at the centre of major strike action by the Communication Workers Union (CWU). The union has agreed a pay deal with Royal Mail bosses, with its members currently putting it to a vote.

Royal Mail is also now on the hunt for a new chief executive after CEO Simon Thompson said he would step down. Mr Thompson’s tenure at the helm of the company is likely to be remembered for two disastrous appearances in front of MPs in the House of Commons. His performance has led to calls for Royal Mail to be brought back into public ownership.

But what has this all meant for the company’s share price? Here’s what you need to know.

How have strikes hit Royal Mail’s finances?

In its annual accounts for the 12 months to 26 March 2023, Royal Mail revealed an operating loss of £1.04 billion - a 518% reversal on the previous year. Parent company IDS fell to a £748 million loss, with the difference in the figures explained by a £296 million profit from its international parcel division GLS.

When it last reported financial results in January 2023 - for the first nine months of the 2022/23 financial year - Royal Mail estimated 18 days of strike action up to then had cost it around £200 million. There is no such estimate with the full year announcement.

As well as the strikes, losses were put down to a major drop in the number of Covid test kits being delivered, as well as a decline being seen in the volume of digital retail sales amid the cost of living crisis. Compared to the 2021/22 tax year, it delivered more than 300 million (22%) fewer parcels (its most lucrative deliveries) and almost 700 million (9%) fewer letters amid a long-term decline for the method of communication.

What is Royal Mail’s share price?

From highs of almost 530p at the start of 2022, Royal Mail’s parent company IDS has seen its share price embark on a sharp decline ever since.

Indeed, its shares are now worth 60% less, with the latest price sitting at 206p (on Thursday 18 May) according to the investor section of the IDS website. On the day of the latest results release, shares slid more than 7%.

But its stock is still well above the lows of 183p seen in September 2022 when the CWU announced six strike dates and there seemed little prospect of a resolution to the industrial dispute. Shareholders will still be disappointed, however, as the company’s board has not approved a dividend for the year.