By Scott Kanowsky
Investing.com -- London-listed shares in International Distributions Services PLC (LON:IDSI) slid sharply on Friday after the British postal service unveiled plans to deeply slash jobs in an attempt to begin "rightsizing" the business in the wake of a first-half loss.
In a trading update ahead of its next results on November 17, Royal Mail said it expects to post a six-month adjusted operating loss of £219 million, swinging down from a profit of £235 million in the corresponding period last year.
The decline included around a £70 million negative impact from three days of industrial action by the Communication Workers Union (CWU), with employees striking over pay and working conditions.
The labor battle subsequently led the company to estimate that it will need to announce between 5,000 to 6,000 redundancies by the end of August 2023.
Around 5,000 full-time roles are expected to be eliminated by March next year and about 10,000 by August on a rolling 12-month basis.
"The position of Royal Mail has deteriorated due to a combination of the impact of the industrial dispute, an inability to deliver the joint productivity improvements agreed with CWU [...], and ongoing macro-economic headwinds," Royal Mail said in a statement.
The group added that it expects its annual loss to balloon to approximately £350 million, citing the effect of eight more days of strikes which "have taken place or been notified." This fall could widen to nearly £450 million if customer demand falters due to the labor actions, Royal Mail warned.
It also flagged that the CWU has threatened a further 16 days of walk-outs in November and December.
"If these take place, the loss for the full year would increase materially and may necessitate further operational restructuring and headcount reduction," Royal Mail said.
However, the firm added that the ongoing issues have made it impossible to provide clear guidance for the full year.