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Royal Mail expands in Canada with acquisition

by LLB Reporter
8th Oct 21 9:27 am

Royal Mail is buying Canadian ground-freight carrier Rosenau Transport in a £210m deal.

Rosenau will be folded into Royal Mail’s GLS parcels business, with the deal funded through existing cash and borrowing facilities.

AJ Bell’s Russ Mould said: “On a day when Royal Mail launched a drive to take on 20,000 Christmas workers in the UK the group also signalled its ambitions closer to Santa Claus’ neck of the woods with a sizeable acquisition in Canada.

“The deal to pick up freight carrier Rosenau looks to fill in the gaps in its Canadian business and should help with realising growth ambitions for its GLS international logistics arm.

“Arguably this is the part of the group with the most potential and it is not faced with the same level of structural issues as its UK-based business.

“Royal Mail has outlined plans to double GLS profit to €500 million from the 2020 financial year to the 2025 financial year.

“As GLS becomes an increasingly significant part of the business the case for demerging it from the UK letters and parcels operation may gather strength.

“While the UK arm has benefited from Covid and an increase in the volume of parcels being sent due to the e-commerce boom, it is lumbered with a structurally challenged letters operation, large pension liabilities and substantial cost base.

“Costs are likely to see upwards pressure in the near-term as the company launches its seasonal recruitment drive, with the business impacted by wider staffing shortages in the economy.”

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