BUSINESS LIVE: Royal Mail losses widen; Young’s to acquire City Pubs; Mars subsidiary to buy Hotel Chocolat

Diageo boss Debra Crew admitted it is difficult to predict when the company could clear up the issues in Latin America that led to a surprise profit warning and sent its shares 16 per cent lower.

The world’s top spirits maker said last week that sales were set to fall by more than 20 per cent in Latin America and the Caribbean, which makes up around 11 per cent of business.

Royal Mail adjusted operating losses widened from £219million to £319million in the first half, dragging its otherwise profitable owner International Distribution Services to an overall loss of £169million.

IDS told investors this morning it expects to pay a modest dividend from its unit GLS this year and its adjusted operating performance would be around the breakeven point this fiscal year.

Martin Seidenberg, CEO of IDS, said:

‘We have two businesses with great potential – Royal Mail and GLS. Three months into the job I am more convinced of that than ever.

‘When I arrived, I took action to stabilise Royal Mail, after performance had suffered due to industrial action and customer losses. We’ve delivered on that plan through rigorous cash management, controlling our costs and ruthlessly prioritising high-return projects.

‘My top priority now is improving quality. From experience, I know that quality is key for customer satisfaction and sustainable growth, so we are pulling out all the stops to deliver Christmas for our customers. This includes recruiting 16,000 seasonal workers, opening five temporary sorting centres and launching an incentive scheme for operational employees worth up to £500 each for hitting local and national quality targets.

‘We have a clear plan for improvement longer term, including reinforcing operational management at a regional and local level, and recruiting faster than ever before, reducing reliance on agency workers. A number of changes we secured in the agreement with the Communication Workers Union (CWU), such as new sickness and attendance policies, will also help to underpin quality.

‘We’re making good progress implementing that agreement, but our change agenda is wider and will take time.’