Royal Mail's stock has seen its losses widen on Tuesday so that its decline following a profit warning that brought investors down on Monday's last trading session fell to nearly a quarter in two days.
The British Post fell 7 percent in early trading and became the biggest faller in the FTSE All Share, after plummeting 18 percent on Monday after the group warned that its core earnings would be one-fifth lower this year.
The group blamed the updated guidelines for missing cost savings and productivity targets, which were one of the key pillars of an agreement with union leaders earlier this year.
Under the agreement, Royal Mail committed to reducing working hours in exchange for changes in working practices. But the FTSE 100 company said on Monday afternoon that the improvements "take longer than expected" to deliver.
The group said it now expects adjusted operating income before the transformation costs – which offset the cost of a long-running modernization program – are between £ 500m and £ 550m from 2018-1919. This equates to £ 694m in the year that ended on March 25th.
"Royal Mail has suffered a slump in the stock price, making it the best candidate for the descent from the FTSE 100 when it comes to a reshuffle next December," said Laith Khalaf, an analyst at Hargreaves Lansdown.
The group "emerges from a difficult period of industrial negotiations and relations with the unions are undoubtedly tense and it looks like the solutions to these problems have not yet delivered the desired results, but we have to wait until the semi-annual report in November to get a more complete picture, "he said.
While the cause of the problems is Royal Mail's main business in the UK, the group also showed that even GLS, its international parcel business, was under pressure. Rising labor costs and other costs led GLS profit margins to be stronger than expected.
"We hope that the parcel and GLS businesses can continue their rapid growth, and a standstill triggered by possible industrial action or competitive pressures will certainly cause further problems for the group," said Helal Miah, Investment Research Analyst at The Share Center.
Although Royal Mail said that the dividend would remain unaffected, some analysts were not sure.
The company "has to choose between [the] Dividend and its future, "said Daniel Roeska, an amber analyst.