Royal Mail share price little changed as group reaches agreement with union

Postal operator and CWU to announce detail of pay and pension deal ‘in due course’

Royal Mail share price little changed as group reaches agreement with union

Shares in Royal Mail Group (LON:RMG) have advanced in London in today’s session as the postal operator reached a deal with the Communication Workers Union (CWU) on pay and pensions following months of negotiations. The parties were at odds over the privatised company’s plans to replace its defined benefit pension scheme with a cheaper alternative.

As of 12:57 GMT, Royal Mail’s share price had jumped 0.41 percent to 470.90p, as compared with a 0.54-percent gain in the mid-cap FTSE 250 index. The group’s shares have added more than 15 percent to their value over the past year.

Group reaches deal with CWU

Royal Mail and the CWU announced in a joint statement today that the negotiators had finalised the details of a proposed agreement covering the matters under discussion including pensions, pay, the shorter working week, culture and operational changes. The agreement will be considered by the CWU’s Postal Executive Committee next week, with a further announcement with the details to be made in due course.

The parties further noted that ratification of the final agreement would be subject to a ballot of CWU members and approval by Royal Mail’s board.

Analysts on Royal Mail

The 14 analysts offering 12-month price targets for Royal Mail for the Financial Times have a median target of 443.50p on the shares, with a high estimate of 525.00p and a low estimate of 300.00p. As of January 20, the consensus forecast amongst 17 polled investment analysts covering the blue-chip group advises investors to hold their position in the company. 

Liberum meanwhile remains bearish on the privatised postal operator, arguing that Royal Mail may struggle to offset a drop in letter revenues with parcel growth.

As of 13:17 GMT, Friday, 26 January, Royal Mail share price is 468.50p.

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