Royal Mail share price: Company introduces new surcharging structure for underpaid mail

on Oct 5, 2015
Updated: May 24, 2024

Royal Mail Plc (LON:RMG) has announced changes to surcharging of underpaid or unstamped mail designed to simplify the current structure and “reduce delays in processing underpaid mail and minimise inconvenience for customers”.

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Starting today, the company is introducing a flat fee structure, under which a £1.50 fee is to be paid by the recipient of a letter or a large letter where insufficient postage has been paid. The fee is £2 if no stamp has been attached. For small parcels where insufficient or no postage has been paid the fee is £3.

Under the previous system, the surcharge was calculated as a £1 handling fee, plus the full postage due.

Stephen Agar, Royal Mail’s managing director of consumer and network access commented when announcing the changes last week: “Surcharging customers is the last thing Royal Mail wants to do.” He continued:

“The vast majority of consumers get it right most of the time. On the occasions where they don’t, the surcharge helps to cover the extra cost of handling items that have been underpaid or have no postage attached.”

Royal Mail does not expect the new system to lead to an increase in the average amount a typical household currently pays in surcharges each year, or to more items being surcharged.

In today’s trading, Royal Mail shares were up 33 percent as of 14:57 BST. The stock has risen 6.4 percent since the start of the year and the company’s market capitalisation currently stands at £4.6 billion.

The 15 analysts offering 12 month price targets for Royal Mail have a median target of 500.00p, with a high estimate of 625.00p and a low estimate of 360.00p. As of October 02, 2015, the consensus forecast amongst 18 polled investment analysts covering Royal had it investors should hold their position in the company.

The same consensus estimate has been maintained since November 20, 2013, when the sentiment of investment analysts deteriorated from “outperform”.

As of 15:56 BST, Monday, 05 October, Royal Mail share price is 457.00p.

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