In last week’s third-quarter results, the postal giant cut the upper range of its 2019 profit forecast on expectations that letter volumes will decline more than previously estimated, while parcel deliveries will slow, too.
With a rebound in profit or cash flow looking unlikely any time soon, Deutsche Bank warned again that the dividend is now facing the chop as it cut its own divi predictions.
“We cut our 2019/20E dividend using what we think is a more sustainable dividend pay-out ratio of 70% of earnings,” read a note to clients.
Analysts at the German investment bank also chopped the price target to 180p from 250p – implying a 35% downside from the current market price of 278.2p.
Liberum looking for a cut, too
Deutsche Bank isn’t the only one tipping a dividend cut; City broker Liberum said in a note last week that it, too, is expecting one.
“The annual cash cost of more than £240m could go a long way to funding a restructuring programme,” said Liberum.
“We think it is unlikely that the dividend will be suspended altogether, although that cannot be ruled out.”