By Yadarisa Shabong
(Reuters) -Royal Mail's parent group on Thursday named the head of its international parcels network as group CEO, reuniting its foreign and domestic operations under a single leader as it seeks to turn around its loss-making UK business.
International Distributions Services (IDS) said Martin Seidenberg, a 50-year old German who has been CEO of the GLS logistics business since June 2020, would be tasked with setting the group's "strategic direction".
IDS shares rose 3.5% in morning trade after news of Seidenberg's appointment, which represents a U-turn.
IDS did away with a group CEO after Rico Back resigned in 2020, opting instead for separate CEOs for the two businesses under a single chairman, Keith Williams.
Royal Mail (LON:IDSI) made a 1 billion pound loss last year, hit by sliding revenues and 18 days of strikes by postal staff. Workers this month accepted a pay deal, weeks after unit CEO Simon Thompson said he would stand down in October.
Seidenberg said Royal Mail has "plenty of opportunity ahead" given its brand and scale. "But we must seize it."
An IDS spokesperson said GLS revenue had grown to 39% of the group under Seidenberg, "making it the right time to bring together these two companies of equal importance under single leadership".
Royal Mail's revenue fell 4% in the first quarter, while GLS's grew 7.4%.
Hargreaves analyst Matt Britzman said Seidenberg's move looked like a good appointment, but analysts at Bernstein questioned the decision, saying investors might remember problems that followed after then GLS CEO Back was made group CEO in 2018.
IDS has over the last few years been working to transform Royal Mail to a parcel-led business, and said in May that it would switch its investment focus to GLS.
"It makes sense for a single CEO to drive that work across the Group on behalf of the Board," a spokesperson said.
Seidenberg, who previously spent 15 years at Deutsche Post (ETR:DHLn) DHL, joined GLS in 2015 and has been a board member since April 2021.
He will be tasked with mending relationships with UK labour union CWU and driving the group and the UK business back to profitability.
He will appoint CEOs for the two units in due course, the company said.
In a separate statement, IDS said it was still targeting an adjusted operating profit for the group this financial year.