Royal Mail share price: Group loses fight to stay in FTSE 100
Royal Mail Group (LON:RMG) is set to drop out of the FTSE 100, following the recent falls in the company’s share price. The demotion from the blue-chip index comes nearly four years following the postal operator’s initial public offering, reigniting concerns that the government sold the group’s shares on the cheap.
Royal Mail’s share price has been little changed in London this morning, having inched 0.05 percent higher to 390.70p as of 08:39 BST, slightly underperforming the broader UK market, with the benchmark FTSE 100 index currently 0.25 percent better off at 7,383.92 points. The group’s shares have lost nearly a quarter of their value over the past year, and are down by some 16 percent in the year-to-date.
Index provider FTSE Russel announced yesterday that Royal Mail will drop out of the FTSE 100 at the close of business on Friday, September 15. The demotion came after the group’s shares closed at 390.5p, giving the postal service a market capitalisation of £4 billion.
“Royal Mail has lost its struggle to maintain a place in the FTSE 100. We’re not sure that’s something you can lay at chief executive Moya Green’s door though, as the group continues to face tough market conditions,” Nicholas Hyett, equity analyst at Hargreaves Lansdown, commented, as quoted by the BBC. “Letter volumes have seeped away faster than the group had expected, partly as a result direct marketing drying up as business confidence slumped after the EU referendum, while pricing remains tough in parcels.”
The demotion from the FTSE 100 comes nearly four years after the postal operator floated on the London Stock Exchange at 330p per share. Royal Mail’s share price, however, soared 38 percent from 330p to 455p on the first day of trading, prompting concerns that the stock was sold off too cheaply.
FTSE Russel said that Provident Financial Group (LON:PFG) was also set to leave the FTSE 100. NMC Health (LON:NMC) and Berkeley Group (LON:BKG) meanwhile are set to join the blue-chip index.
As of 09:04 BST, Thursday, 31 August, Royal Mail share price is 390.30p.
