May 22, 2019
Royal Mail to cut dividend as it plans £1.8bn investment programme
Royal Mail is to cut its dividend as it invests £1.8bn in the postal service over five years as part of a turnround plan aimed at securing the future of the 500-year-old organisation. The FTSE 250 company said that from next year it would set a basic payout of 15p per share - a drop from this year's total dividend of 25p. The decision will come as a huge blow to Royal Mail's many retail investors who share in its £240m dividend pot and have benefited from its previous policy of "Progressive" or rising payouts over time. A damaging profit warning last year after Royal Mail missed productivity and cost savings targets sank share its price by almost one-fifth. Royal Mail's preferred earnings metric, which strips out expenses from a long-running modernisation programme, came in lower than year last. Operating profit before transformation costs slumped more than a quarter to £509m. Management recommended a final dividend of 17p, giving the full-year payout of 25p. It said that the "Rebased" dividend from next year could be supplemented by additional payouts in years with "Substantial excess cash flow".
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