Bpost Sa Ord

Good day and welcome to BPOS Fourth Quarter 2023 Analyst Call. Today's conference will be hosted by Mr. Chris Peters, CEO, and Mr. Philippe D'Artien, CFO. Throughout today's presentation, all participants will be in listen-only mode. Later, we will conduct a question and answer session. You may press star 1 on your telephone keypad at any time to register for questions. This meeting is being recorded, and at this time, I'd like to hand the call over to Mr. Chris Peters. Please go ahead.

Good morning ladies and gentlemen. Welcome to all of you and thank you for joining us. I'm pleased to present our fourth quarter and full year 2023 results as CEO of BePost Group. With me I have Philippe Darcien, our CFO. We posted the materials on our website this morning. We will walk you through the presentation and will then take your questions. Two questions each would ensure everyone gets a chance to be addressed in the upcoming hour. Let's go to the highlights of the full year results and Philippe will then walk you through our four quarter 23 results. 8.5 million euro. To put things in perspective let's recall our initial EBIT guidance of 240 to 260 million euro announced in February which had to be withdrawn a few months later due to internal compliance reviews and the EBIT guidance of above 240 million that we managed to reinstate at our third quarter 23 results as we had gained more visibility on the impact of the compliance reviews and the repricing of services to the state. Despite the negative financial impact of 10 million euro for the repricing of services of the state in 2022, as well as the financial impacts associated with the compliance reviews, 248.5 million therefore meets both our initial and reinstated guidance. This was not a given from the outset and this is a great achievement of which we can be proud of as a company. Let me share with you the key highlights of the year for each of our businesses units and we'll then get in more details to the fourth quarter results. Our Belgian segment contributed for 183 million euro to the group adjusted EBIT with a margin of 8.1%, well within the guidance range of 7 to 9%. This represents a decrease in EBIT of 15 million compared to last year, including the negative 10 million impact I've just mentioned for the repricing of state services in 2023. Our top-line development was primarily driven by resilient male revenues, where our volume decline of minus 8.4% was offset by a strong positive price mix. fueled by a volume growth of plus 6.3 percent mainly attributed to the success of our commercial hunting plan launched in 2022 and the price mix effect of plus 4.8 percent on the cost side belgium mainly faced the effects of year over year seventh consecutive automatic salary mitigated by some productivity gains and the stabilization FTEs despite higher parcel volumes. In e-logistics Eurasia adjusted EBIT stood at 38 million with a margin of 5.7% above our guidance of 3 to 5%. Our top line growth was driven by the continued expansion momentum at Radial Europe and Active Ed, which witnessed a in 2023, as well as strong cross-border sales from existing and new customers in Asia. OPEX evolved in line with volume development, with part of the higher transport costs benefiting from a favorable mix for volumes with destination Belgium. At eLogistic North America, adjusted EBIT stood at 65 million with a margin of 4.5%, at the low end of our guidance of 4.5%, third quarter 23 results. This was anticipated as our fixed costs average was eroding as revenue pressure was materializing over the Market backdrop and overcapacity in the market led to a 10.7% decrease in top line, excluding foreign exchange impacts. Lower volumes at Radial and Landmark Global, where market conditions have been further compounded by Amazon's insourcing, have nevertheless been mitigated by an effective alignment of resources to demand and or continued focus on productivity resulted in a decrease of 11.3% in OPEX enabling us to preserve our margins in difficult market conditions. Finally, CAPEX ended up at €155 million, below the revised envelope of €180 million, reflecting our financial discipline in a disrupted market environment. In terms of dividend, our results allow us to propose a dividend per share of 13 euro cents gross to the general shareholders meeting. This corresponds to a payout of 40% of the IFRS reported net profits. at the midpoint of the 30 to 50% range foreseen in our dividend policy. I will now hand over to Philippe for the quarterly results and I will then take the floor to share with you my first observations since my arrival at BPOS Group and to walk you through our management priorities.

Thank you, Chris. Good morning to all. We are very pleased to report that thanks to a good execution of the year-end peak and some productivity gains across our business, we delivered a good quarter despite ongoing revenue pressure in North America and a soft market backdrop in Belgium and in Eurasia, and we'll come back to that one. Our group operating income for Q4 stood at €1,217,000,000 and declined year-over-year by 6.5%, mainly due to ongoing pressure in North America, while on the other hand, our domestic mail and parcel activities continue to deliver strong performance and our e-fulfillment activities in Europe and our Asian cross-border sales continue to grow. our group-adjusted EBIT stood at 74.1 million euros with a margin of 6.1%. Operationally, when excluding the negative 2.5 million euros impact for repricing of the state services in the quarter, EBIT remained flat year over year. with productivity gains and price increases offsetting top line pressures and cost inflation, as Chris already alluded to. Before diving into the financial performance of our business, you will note on slide five that while our adjusted EBIT only slightly decreased from 77 to 74 million euros, our adjusted net profit decreased significantly from 83 to 35 million. This decrease is primarily due to a nearly 43 million decrease in financial results, as last year we benefited from a favorable non-cash impact related to IS-19 employees' benefits in line with higher discount rates at that time. Let's now move to the details of Belgium on page 6. At Belgium, we see that revenue increased by 11 million to 581 million euros. Domestic mail recorded an underlying mail volume decline of minus 8.1% for the quarter against a minus 7.5% in Q4 2022. This impacted revenue by 25.1 million euros, yet mitigated by a positive price and mix impact of plus 24.7 million euros, resulting in a stable domestic mail revenue year-over-year. For parcels in Belgium, they recorded in Q4 an increase of 9 million in revenue or plus 6.6%. Parcels volume increased by 3.4% year-over-year. The percentage growth for this quarter was anticipated to be slightly lower than in previous quarter due to the high cons of last year and the phase out of the commercial hunting plant implemented in 2022. However, we also acknowledge that volume development fell below our estimates in December, where we even observed a decline in volume after strong start to the quarter. December months have been rather disappointing from a customer confidence standpoint. We'll come back on that one. It is something which is observable not only in Belgium, but also in Europe and in the US. These trends observed in neighboring countries, as I said. Price mixed at plus 2.2% in Q4, mainly driven by higher price increases. Proximity and convenience retail network revenue increased by 3%, following the indexation of the management contract. Value-added services remained stable. As explained in the previous quarter and as anticipated, intersegment and other revenue comprise a negative 2.5 million euros impact for the repricing of the state services in the particular quarter. We also see on that line the higher intersegment revenue from inbound cross-border volume handled in the domestic network for e-commerce and logistics Asia. Again, Chris alluded to it from the Asian volume destination Belgium that has been delivered in the last quarter. On the cost side, our adjusted OPEX, including depreciation and amortization, increased by 22.5 million, mainly driven by higher salary costs. Again, during the entire year, we had seven 2% increases. for the full year 2024. On one end, the cost per FTE increased by 4% year-over-year, so quarter-quarter, following the impact of the three-salary indexation that occurred since Q4 last year. While on the other end, we continue to maintain our FTE stable despite higher parcel volume, meaning that some productivity gains have been achieved. Bottom line, excluding the repricing impact, our underlying adjusted EBIT only slightly decreased by 2.4 million year over year as inflationary pressures have been successfully mitigated by our top line development and productivity during peak. Moving on to e-logistic Eurasia. Revenue were up 14 million, mainly reflecting a strong growth across border Asia. In e-commerce and logistics, revenue increased by 4 million euros. Remember, we have various businesses with different trajectories. Radial Europe and Activen sales were up 13%, a growth fueled by new customers onboarding in existing sites, as well as international expansion and upscaling from existing customers. We see more and more customers being present in one country, dealing with us or making operation with us in other countries, which is a very positive evolution and a cross-sell of the cross-sell initiative. At Dyna, price indexation only partially mitigated the lower volumes across all business types. Cross-border, revenue increased by 9 million euros or plus 10%. You will recall that in the previous quarter, we reported a decline in revenue of minus 7%, contracting with the growth recorded in the first half of the year. This decline was notably linked to adverse UK market conditions and the consolidation impact of IMX. This quarter, revenue growth mainly reflects on one end the contribution of new customers and a continued growth from recent customer wins. both resulting in strong volume from China to Belgium, and on the other end, the impact of ongoing challenges, conditions in the UK, as already reported in the third quarter. If we move to the P&L, while the top line increased by 8.2%, operating expenses, including depreciation amortization, only increased by 6 million, or 4%. This evolution is mainly explained by higher transport costs in line with higher activities and a favorable mix at cross-border for the volume with destination Belgium and lower salary costs with inflationary pressure offset by some lower FTE and improved automation and productivity. From a profitability standpoint, Asian cross-border volume with data from Belgium contributed to the sequential margin improvement from 3.1% in Q4 last year to around 5% in the previous quarter and up to 7.1% in the last quarter of 2023. Let's move now to our North American e-logistics business. In line with the previous quarter, our top-line North America continued to be impacted by the economic softness, the market overcapacity leading to high degree of competition and pricing pressures, as well as the insourcing of Amazon, which continues to impact landmarks. The operating income of e-commerce and logistics decreased by 19%, or 106 million euros. At constant exchange rate, this corresponds to a decrease of minus 15%. At Radial, the top line decreased by 16% year-over-year, as the lower sales from existing customers and the in-year contribution of new customers win, could not compensate the client churn that we announced at the end of 2022, and we saw further acceleration in 2023. As discussed at our Q2 and Q3 results, and to put the 16% drop US revenue in perspective, we continue to see strong volume pressure in the US parcel market, for instance for FedEx and UPS. At Landmark, besides our general price pressures in the market, this is now the fourth quarter that we continue to record

next year and the business plans of the coming years and so we will report on that probably by year end backwards to you the financial community and maybe have a look at what we have launched meanwhile in terms of initiatives obviously what you've seen at the group level is we already recruited meanwhile a CDO which is already up and running today we're in the middle of the recruitment process of an other EXCO member which will be coming weeks on that side. On top of that we are working in revisiting some parts of our international portfolio to make sure that we capture better the synergies of that portfolio into the rest of the business and in between those businesses and also to ensure that the focus is fully on the higher value part of that business. If we then zoom into Belgium, as you've seen a lot of the public discussions over the last the press distribution contract. We are in the middle of those negotiations, so not a lot that we can say about that. But just for your reminder, so we were waiting actually a result of the tender process for a new concession for another five years. foreseen. A few weeks in the new role the news came in that the government would not attribute that contract and since then we are in a transition period as of the 1st of January and that is a transition period where we have received 75 million for the first six months to continue to work in a concession mode towards the press distribution. Meanwhile we negotiate with and as soon as we will come to a conclusion of that we will definitely communicate back how that potentially will impact the figures of Belgium and the figures of the group accordingly. In parallel to that we're working on further optimizing our operating model so to ensure that we can continue to squeeze out all the efficiencies but also to make on products, as I said before, so that we have more attractive products and that we can continue the volumes and the margin on these products. We're entering pilots into the B2B parcel market and very important as well, we are launching a large-scale quality management be in the higher segment of that. If we then zoom in to the e-logistics in Eurasia and in North America, for the European side you saw nice top line growth figures which we continue to work on and we see that there is an attractive pipeline in terms of that we have ongoing today. Radial US, a little bit of a different story. We've seen there, as you've seen last year, an important impact of CHIRM on the portfolio, which had to do that, or positioning within the market was towards the large-scale retailers in APREL and Health and Beauty, which basically use sometimes the Radial US facilities as a swing capacity. We want to move that more towards the mid-size to have a more resilient portfolio also with a bit of better margin that of course will need some smaller but upgrades into our software capabilities to ensure as well that we can serve those mid-sized companies in the right way and across border we are working now to further defend the lanes that we have but also we're looking at a couple of new lanes to see how within Canada and within Belgium. So moving from there then to the numbers again of that we can see on page 16. So there you can see that, let me see that I'm on the right page. Okay, here we are. So as commercial negotiations with the Belgian press editors and involved stakeholders are still ongoing and the corresponding operational and financial impacts are still unknown, BPOS Group is not in a position today to provide a group EBIT outlook for 2024. However, we want to provide you already with a guidance on the underlying operational and financial parameters at the segment level. For Belgium, excluding press revenues on which we have no certainty yet, we expect slightly higher total operating income in 2024. We know to be planned for a male volume decline of six to eight percent again excluding press volumes mitigated by a price mix impact of four to five percent while or parcels revenues will be driven by a high single digit percentage volume growth and a low single digit percentage price mix to help you with press note that or press at 350 million euros, out of which 255 million were tied to the press concession, with a contribution of 163 million from the Belgian state and the remainder paid by the editors. For 2024, the Belgian state announced in December the extension end of June, with a budget of 75 million. At this stage, we therefore only have visibility on the first six months of the year. Prior to any press impact, we expect the adjusted EBIT margin to range between 6 and 8 percent, which reflects higher payroll costs due to salary indexations and cost inflation, partly offset For e-logistics Eurasia, we anticipate a low double-digit percentage growth in total operating income relying on our continued growth of radial Europe and active ENDS. of last year. Strong productivity gains at radial and active ends are expected to mitigate and anticipate negative mixed effects at cross-border, some higher FTEs and overall cost inflation. For e-logistics North America, assuming a Euro-US dollar rate of 1.09 for 2024, we expect our top line to remain under pressure and to decrease by a high single digit percentage. This reflects at Radial a net volume loss from the client churn we saw materializing in 2023 and the commercial concessions that have been granted in the context of adverse market conditions. I'm here referring to the overcapacity of new cross-border lanes. Similar to our guidance for 2023, adjusted EBIT margin is expected to range between 4% and 6% in 2024, with top-line pressure being mitigated by continued VCM rate improvements at success At group level, again excluding press revenues, we expect the top line to remain stable in 2024 and the guidance on EBIT will be confirmed as soon as we get more visibility on the outcomes of the commercial discussions with the press editors. We're now ready to take your questions. Again, two questions each please, so that everyone gets the chance to be addressed during the session. Operator, please open the lines.

Thank you, sir. As a reminder, to ask a question, please signal by pressing star 1. Now, the first question comes from Michelle DeClercq from KBC Securities.

Please go ahead. Thanks for taking my questions. First of all, welcome, Chris. Two questions from my end. The first one is on the outlook for Belgium. I understand, of course, that press is excluded from this, but you guide for quite some nice parcel volume growth and also mail, which I assume will be related also to the upcoming elections in Belgium. At the other hand, your inflation pressure will be a bit more limited this year compared to last year. So I'm just wondering why is the underlying outlook only between 6% to 8% versus the 8% you had in 2023? I'm just wondering, is this because press has such much higher margin, or how does this compare to 2023 figures excluding press? So that would be the first question. And the second question is, I understand, of course, that you are currently in negotiations for the press distribution, but can you give a little bit more color, anything, whatever you have, would be useful? Also, on the timeline, I assume that there is a deadline by the end of the first half, because then the current press concession, or the 75 million ends, what happens if you don't meet that deadline if there is no outcome yet. So these would be my two questions. Thank you.

Thank you. Philippe, you take the first? Yes, I take the first one. So, as you rightly pointed out, Michel, indeed, we see an expected increase in parcels. Yes, indeed, I would say against the natural volume decline in terms of mail, there will be a positive impact of election. Typically, we assess that positive impact around half a percent. So it gives a little bit of perspective. And now to your question on why are we only seeing a slower positive evolution in terms of the EBIT, we really need to be reminded that we still had inflation of cost in 2023 that will have a full year impact in 2024, especially on the payroll cost side, because just on the payroll cost side, the last indexation that was applied was in December 2023, so meaning that January 21st will really have the full impact on that one, and we also anticipate some further salary indexation in 2024.

Okay, does that answer your question?

Yes, thank you.

Okay, and then on the press negotiation, obviously it's not a lot that I can reveal, but in terms of timeline, indeed, so we're planning to have the negotiation finalized and have agreements, if we have agreements, of course, on that by the end of the first quarter. That being said, in parallel, of course, we look at all possible outcome scenarios where we will have all the volume, where we have part of the volume, where we have no volume. And so we are preparing the different kind of scenarios. Obviously, it's a little bit, let's say, too early to communicate on anything of that because all will then depend probably more to the end of March. And I think that it's not, at this point of time, good to reveal. But as soon as we will have, let's say, clarity on that and firmness around that, we for sure will come back and communicate about that to the markets.

All right. Thanks for the timeline.

Those were my questions. Thank you. Our next question comes from Henk Slotboom from The Idea. Please go ahead.

Yeah, good morning. Thanks for taking my question. Also, from this side, welcome, Chris, and thanks for the presentation. I've got two questions. I've got maybe more, but I will stalk Antoine with that later today. The first question would be on the use of septic actors in... I'm aware of the fact that you predominantly use your own staff to deliver parcels, but two of your main rivals are using predominantly or only subcontractors. I've seen that Petra, what's her name, De Soeter, announced a minimum, or was thinking about a minimum compensation for subcontractors of around 32 euros per hour. Has that formalized already? When do you expect that to kick in? And could it possibly help you to gain market share vis-a-vis your colleagues? Because obviously, if their costs go up, then it brings you in a better competitive position. And then my second question would be regarding the outlook for 2024. I fully respect the fact that you don't give an EBIT guidance for the current year. because of the press distribution contract. But if I remember it correctly, there were some other things, some loose ends from last year, given all the reviews that have taken place. Has that now all been settled? We've seen a repricing of the contracts you have with the Belgian state, but I remember there were more things. Could other things interfere with your 2024 outlook as well? Those were my questions. Thank you.

Maybe on the change of the law for the ones that are delivering the parcel to the door. So that is a decision that was taken by the government a few weeks ago. It will take its time to get translated into law, but it's still something that we expect that Texas end of this government period and so that they will be applicable likely depends on what they put on the date of that but still somewhere in the course of this year. We today don't take into account any specific volume gain that we have because it's a little bit hard to see what the impact is on the other places on BPOST itself in terms of its position. So the law, we already are in line with that law, so we don't have to make any adaptations. We have read together with you in the press that some other people used at least some contracts that were considered as borderline or even beyond borderline on the way how they were using that. We don't know exactly what the current situation is into that perspective. And that is, of course, some that will play an important role I think importantly of course is it will become a level playing field at that point of time a level playing field I think if you see the quality of delivery that we have had over the time and the NPS that we had for our parcel business puts us in a good position to be strong in that market but we don't make any projection yet on the volume impact that this could have to us and then if The second question was?

The question is the evolution of the three cases.

Okay, so on the cases it's following. So the decision for us was made at the moment that the provision was made. It was before my arrival that we will close these files in good faith and so that we will turn that page. The situation on the... three specific files is that our audit done with external support have been finalized and have been shared under NDA with the three respective administrations. They are now in the phase of doing their part of the analysis independently or with a other audit to confront our audit with. From there, there will be probably a discussion to then confirm or not confirm the figures that we have put into provision and the amounts that will have to be paid. Anyhow, the conclusion that PPOS has made this for us is business-wise something of the past that will be a financial settlement at the moment of date and a correction in the provision if needed. But that's basically how we look at the case as we speak.

Okay, thank you. That is very clear. One follow-up on the sub-cows. The tariff was at 32 euros per hour, is that correct?

Yes, that's correct.

Okay, thank you very much.

We will now take our next question from Mark from ING. Please go ahead.

Good morning, it's Mark from ING. Welcome, Chris. Two questions from my side on the parcel volumes. You're guiding for high single-digit volume growth. It's quite a bit of an acceleration what we've seen in Q4 because of the hunting plan annualizing. Hey, maybe give a little bit more color what you're seeing in the first months of this year. Is that already in line with the guidance already above? And where do you specifically see the strength in volumes in the parcel business? That's my first question. Then on the second one, it's on your corporate cost. You guide for a bit lower building sales, higher compliance costs, etc. Can you give a bit more color on what we should expect there in terms of a bit of decline for the corporate side?

Thank you. So on the corporate side, indeed, you remember that in past years, there have been recurrent building sales. We are resulting in positive P&L impact in the year of the sale of the business. We are slightly revisiting that policy because we consider that they are a critical place where we need to be and we'd better be the owner of this place because they have value from a logistics standpoint. Sorry, also as an access to our customers, so we are changing a bit that one. That's on one end. So we do not expect to have additional sales in the coming in 2024. And on top of that, we will continue on the same vein, which is carefully reviewing the headcounts and the productivity. And we are planning to continue the same headcount reduction as we have observed in the recent years and namely in 2023.

So in terms of decline, should we be thinking about something in the range of 5 to 10 million, or is it even more?

I would rather say that in terms of, we will focus more on headcount reduction, which is, as we mentioned, was minus 5.3% for 2023. We're aiming at delivering something equivalent, but you also have to keep in mind that, as Chris mentioned it earlier in his speech, we are in the middle of a major transformation. We still have a lot of strategic projects to be carried out, and these come at a cost. So when this will be over, we will see an acceleration of the decrease of the cost. But for 2024, from that front, of course not from the FTE front, but from that front, we do not expect to have a significant reduction in cost. And when it comes to parcels, so indeed, we are anticipating high single-digit growth on volume, and specifically for the first months of the year, I would say that what was observed doesn't lead us to revisit this guidance.

And where does that acceleration come from? Is it better consumer confidence? Because actually, if you look at PMIs and savings rates, January didn't look that great. So maybe, where do you see that coming from?

Expensive. But it's again the commercial hunting plan. We had a program that was called the commercial hunting plan. We are not stopping trying to gain new customers, either small ones, medium or huge ones. And we will continue in the same trend. So we are very optimistic when we see the quality that we are delivering on the parcel side that will be able to attract more customers on our side.

So it's also a bit of a market share gain a bit in there. Yes.

Yes, clearly, clearly, absolutely, absolutely.

Which we also have seen over the course of 23 years, so there's a continuation of what we've seen. I think that you see that we will continue to force as well the transformation program even more quality because we see that that we have that this aspect of quality becomes a very relevant factor next of course to a couple of other things like co2 emissions per parcel delivered etc so there are a number of things that we see in the negotiation that puts us in a strong position to estimate that we can continue to have a slight increase in market share and also we have been we have some very large customers who have a

growing business and we will enjoy the growth that they are having themselves with their end customers. So we'll be following them on that one.

Yeah, it was in Q4 or at Q3 that the guidance was a bit like we're moving more closer to market growth because the hunting plan is annualizing, but I get now the message that that gap is widening again with new hunting plants and successful market share gains. Is that the correct picture that I have now?

Yeah, and the impact of high-volume customers, which are there. We don't need to gain them. When they will be selling one additional euro, there will be the translation in our last-mile volumes.

Yeah, clear. All right, thank you very much. And our next question comes from Marco Limite from Barclays. Please go ahead.

Hi, morning. Thanks for taking my question. My first question is just a follow-up on the volume growth expectations. And I just wanted to clarify, when you are mentioning hunting plan and increasing market share, are you still talking about... B2C volumes or some of that high single-digit volume growth that you expect for next year is actually already B2B volumes where you want to push on a bit more already coming through. And the second question is on your dividends, which came in a bit below expectation. Clearly, you are paying out of the reported net income, so including the provision. so uh yeah my question is is yeah what was your thinking about indeed choosing for um let's say reported net income rather than underlying and um Also, shall we think about the 75 million or whatever the number is going to be, the final number is going to be? Shall we think about a cash outflow in 2024 or that's still unknown? Thank you.

Okay. On the parcel volume, it's for 2024 still fully focused on B2C. So the 2024 year, as we said, is a year where we will work on the transformation. We launched Obviously, pilots are not contributing substantially to the volume and we will evaluate probably more towards the Q3 and about scaling these things. And so we will see probably first value impact or volume impact of that that is material by next year, but not by this year. Do you take the one on dividend?

Yes, on dividend. So I would offer you a different perspective to the 13 cents. Because, of course, the 13 cents is impacted by the 75 million provision that we have booked at the end of Q2. That would equate, by the way, to 34 cents, this 75 million. So... since it was relating to an all-potential overcompensation relating to the past, it means that these $0.34 have already been distributed in the past. So I think it's fair to say that to look at the true view on what we are proposing as a dividend this year, this needs to be taken into consideration. If you would add up the sum of the two, you would come at $0.50, which is, by the way, higher than what we have paid last year.

Okay, thank you. And shall we think about the cash outflow related to the tuition coming in 2024? That's still unclear and unknown. Thank you.

As Chris mentioned, the discussion with the three partners of the Belgian ministries are progressing well, but we cannot commit to a final settlement on all the three cases in 2024. We are working towards it, we would like to have that behind us, but we cannot guarantee that it will happen.

Thank you. As a final reminder, to ask a question, please signal by pressing star 1. We will pause for just a moment to allow you to signal. Our next question comes from Sumit Mehrotra from Societe Generale. Please go ahead.

Yes, thank you. Just curious about the strategic initiatives in Belgium. I want to delve a little bit more on the logic that you see behind pursuing the B2B parcel logistics market. I can imagine it's a very different clientele, very different mix effect, and also a difference in the handling infrastructure required to support the heavier business here. So I'm just inquisitive about how do you see the future of this particular endeavor, whether it really fits into your existing scheme of things. Secondly, going to North America, I see that you are yet again saying that refocus on the mid-sized growing brands. I remember... For North America, you had a very specific, well-defined hunting file and managers going after accounts. But really, what is new that you are trying to do in North America, which you couldn't do last year? So what is different here that you're pursuing in radial US is my question. Thank you.

Okay, thank you. So indeed the B2B market is a very different market. I had the benefit as new coming in actually that quite some of these clients reached out. people's can play a role now the interesting thing about that is I agree with you it's a market that demands a likely a different setup than the ones that we have in b2c however a lot of the capabilities that we have and a lot of the the assets that we have can be used into that market so we see that also that like we have seen in the in the in the B2C market by the fact that you have e-business coming in, that there is a personalization of a part of the business at a certain speed, that's an attractive part of course already where we're already available, but also that we see that many of the platforms that we have, take the platform of Dyna, take the active ends of regular euro platforms that we have, complement and actually into that B2B question that we get. So we see that clients are looking for a solution that combines a number of items that we can deliver and actually that often BePost is the only one that can deliver and where we see that today they pay high cost to deliver a service which is actually lower quality than what we could imagine ourselves if we combine well the assets. That being said of course that means as well that we transform and that we make that setup ready for this situation that's why you've seen that we have a cdo coming in to make sure that our it platforms are ready for that so that we can have transversal offerings coming there and hopefully in the coming weeks also an agreement with a strong cco that is able to do that integrative part in our sales process which is Meanwhile, the pilots, what we see, are really focused on very, very different niches that you see in that market. So there will also be a way to think about which are the attractive niches that we have, which are the ones where we can have the most difference with the proposals that we can make given the capabilities and given the assets that we have. So that is something that we're working on today. And that's why you also see that we don't take yet a bullish stand on the volume. that we will capture over there, give us the time with those pilots to learn and to see what are the areas where we then probably do some smaller investments. We don't think that it will demand for our site a huge capex, but some smaller investments that help for that integration and that then can be leveraged and also scaled within those niches where we of course do it today with a single client or sometimes with a handful of clients in the same niche in which we try to develop a certain service and manage and better understand the full complexity, how we can leverage our assets in the best way for the challenges that they have specifically in their niche.

So if you allow me to add one thing on that one, Chris, just for clarification's sake, sorry for that one. When we speak about B2B, it's not only, and we believe it's going to be a small fraction of it, it's not moving pallets. In the B2B business, let's say in the B2C it's one parcel, but you could have a combination of 10 or 15 parcels that you address to a B2B, which is exactly what we are, our organization, is set up for so they might be they probably most likely be have some parcels palettes move but it's not the big chunk of what we're anticipating to capture especially in the digital offering that we want to offer as chris mentioned it

Yeah, and then maybe on the North American side. So I'm not going to, let's say, make any statement on what happened before I arrived. But of course, what you've seen is we still had some churn on, let's say, sizable clients, which is actually by the current management something that they well understood. And with the SVP commercial that we're now in, there has been a buildup of a substantial, sizable pipeline of mid-sized clients that we have. We've also seen that those clients actually are at, for us, a better margin, a lower risk area. and a higher stickiness than the other clients that we have. So now it's really a question in the coming weeks, months, and probably years even yet to further convert this pipeline of potential clients towards then the clients that we embed. And I think it will be a continued, let's say, focus point from our side to make sure that, as you can imagine, sometimes ham management is teased into like we can get a full warehouse filled with one single client. So that always gives a big incentive to people to spend a lot of time on that, that they continue to have the right focus with the sales team. which they do today on these mid-sized clients that might at this point of time per volume intake demand a little bit of more effort from the sales team. But on the other side, in terms of the EBDA contribution that we expect from that, that they are substantially better than the ones that we see in those larger clients.

Thank you.

Thank you. And it appears there are currently no further questions in the queue. With this, I'd like to hand the call back over to Mr. Chris Peters for any additional or closing remarks. Over to you, sir.

Thank you. We would like to thank everybody in the call for having taken the time to be with us and for your interesting questions. We will hear from you at the conferences we're going to attend in London in March. Please note that we will release our annual report The first quarter results will be released in May. Thank you very much and have a nice day.

Thank you. This concludes today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect. Okay, and we're now back in the private post-conference. I hope everything went well.

Yeah, thank you. We're going to hand over to Sab. Thank you very much, Sergei.

Thank you. Have a nice day. Good day.

Sergei?

Thank you. Not the best one at all. Not many questions.

We can't hear each other. He can't hear us anymore.