Bpost Sa Ord

Ladies and gentlemen, hello and welcome to the BPOST Group 4th Quarter 2024 Analyst Call. My name is Ben and I will be your coordinator for today's event. Please note that this conference is being recorded and for the duration of the call, your lines will be in lesson mode only. However, you will have the opportunity to ask questions at the end of the call. This can be done by pressing Start 1 on your telephone keypad to register your question. If you require assistance at any point, please press Start Zero and you will be connected to an operator. I will now hand you over to your host, Mr. Chris Peters, CEO of BPOS Group. Please go ahead, sir.

Good morning, ladies and gentlemen. Welcome to all of you and thank you for joining us. Today, I will be presenting our fourth quarter and full year 2024 results as CEO of BPOS Group. With me, I have Philippe Darcien, our CFO, as well as Antoine Lebec from Investor Relations. We posted the materials on our website this morning. We will walk you through the presentation and we'll then take your questions. As always, two questions each would ensure everyone gets the chance to be addressed in the upcoming hour. Let's get to the highlights of the full-year result and Philippe will then walk you through our fourth quarter 24 results. On page 3, you can see that BIPO's group delivered results in line with its full-year guidance with total operating income exceeding 4.3 billion or groups adjusted EBIT reached 224.9 million euros representing a margin of 5.2% at the upper end of the 205 to 230 million euros guidance reaffirmed in November with our third quarter results. Our overall performance reflects the strong contribution of Stasi. We are pleased with Stasi's performance over the past five months. delivering approximately 340 million euros in revenues and 41 million euros in EBIT, corresponding to an EBIT margin of 12%, ranking among the highest in the logistics industry. This solid performance aligns with our expectation, despite the seasonally softer start in August. However, When excluding Stasi's strategic contribution and looking at performance on a light-for-light basis, the overall picture is different. Revenues declined approximately 270 million euros, driven mainly by two key factors. A reduction of 50 million in press revenues following the new press contracts that took effect after the end of the press concession on June 30th. And a decline of more than 210 million in radial US revenues impacted by the softer US market environment with lower market volumes and increased competition among 3PL providers. Despite these pressures, domestic parcel volume continued to grow, delivering a solid performance in 2024 with an increase of more than 30 million in revenue. However, this has of course remained insufficient to offset the top line decline. Profitability was also impacted with EBIT declining by approximately 65 million euro year over year. In Belgium, EBIT decreased by 45 million, with 33 million of this decline in the second half of the year, primarily due to the press impact mentioned earlier. And in North America, top-line pressure at radial and landmark was partly offset by radial strong productivity gains, helping to mitigate the impact. Also in these adverse market conditions in the US, we have recently learned of the departure of several customers, some of whom are significant in size and have a material impact on Radial's top line going forward. We therefore had to reflect the departure of these customers in our future growth projections, as well as the challenging market conditions translating into lower sales from existing clients and a more cautious outlook regarding the contribution of future customers. This led us to recognize an impairment of €300 million on Radial US, bringing the book value from €912 million to €612 million. Consequently, our reported Group Net result stands at €-209 million, and based on this, the Board of Directors will recommend to the General Meeting in May not to distribute a dividend this year. Before handing over To flip for the fourth quarter results, I'd like to take a moment to reflect on our key strategic priorities of 2024 and how they shape our transformation journey. 2024 was my first full year in the company, arrived in November 2023. I discovered very quickly a great deal of capabilities and expertise within BO's group. BePost Group and BePost Belgium suffered from an identity crisis. We are international, but not global. We still have a lot of postal products, but we are no longer a postal company. 2024 was about accepting our new identity, integrating its consequences, and from this, building a strategic vision for the future. We built synergies throughout the group and leveraged our capabilities to create a better service offering to all our clients whether they are operational in Europe, North America, or Asia. We no longer pursue big clients with big volumes to simply fill up our warehouses. We still cherish our big clients, but we want to become less vulnerable. That's why we now focus on SMEs, we focus on diversified verticals, and we want to fill our warehouses with multiple clients. We want to create value for our clients. We have a range of capabilities combined. We can create a broad range of solutions, which would be almost impossible for the client to recreate by themselves. In 2024, we laid the foundation for this big shift in 2025. BeBose becomes a digital expert in parcel size logistics operational in two regions, North America and Europe. And what has then changed for the group since then? So what you can see here is that we launched our strategic vision to become this regional digital expert in parcel size logistics. And therefore we have now organized the company around three dedicated business units. that each strengthen the group and also can become really leaders in the respective sectors that they are present. We also leverage the capabilities across the group to make sure that we can bring good solutions to our clients. And we diversify our portfolio with clients in the B2B space. And the Stasi acquisition, as you can see, in the VIX was very successful. We're integrating it today. It's on track and also in terms of the synergy creation, we're fully on track for this. Meanwhile, we have developed a transformation roadmap. We have launched several pilots, meanwhile, and we will be ready to scale some of them. later down the year. And we have, again, engaged in investing in some of our male products so that we can prolong a lifetime going forward. If we then zoom into the different PUs that we have, at the 3PL side, looking at North America, there the focus is that we shift the portfolio to ensure that it's more diversified and less dependent of enterprise clients, of which you also have seen that one of those risks was materialized and led to the impairment. So the strategy is still the same as the one that we discussed last year. We will have an intensified focus to realize that. Don't forget that meanwhile, we also drastically reduce the cost and continue to reduce the cost structure and the efficiency of our operation over there. And we have launched a new offering specifically focused on mid-sized companies, which is called Radial Fast Track, that we are piloting as we speak with our first clients in the US. Meanwhile, as well, synergies between Stasi Americas and Radial have been realized or are on the way of being realized in the coming months. If you look at the European side, the integration between Stasi, Active Ends and Radial Europe is on track, meaning that meanwhile they're already exchanging clients, bringing to those clients the best of capabilities we have into the group, and also ensuring that we have a higher fill rate of our different warehouses. If we then zoom into the last mile, then we need to accelerate, of course, from a company which is mainly a postal company in its DNA towards a parcel size logistic operator. And for that, we are now exploring new market segments that could create a new trajectory of growth. So we don't limit ourselves to that. B2C segment, we continue to focus on that, and we continue to focus on Polestop, but we add to that the B2B segment and the C2C segment, and as said before, we launched several pilots in this area which look very promising, and some of them will be scaled in the second half of this year. Also, we extend our out-of-home delivery network. We have already a strong UTO network, but we will increase it also with Parcel machines, automatic parcel machines and lockers so that we can create full convenience, whatever the client need is at that moment. And then we have, of course, as well, evolved the press concession towards a press contract in the distribution model, which is on its full way. And that transformation is also happening today in Flanders. And we're preparing to do the same in the south in the coming years. And also we have modernized some of our mail products, making them more convenient for the client so that we can count on an extension of a lifetime going forward. And at the cross-border side, we have further integrated activities of the other business units into the service offering that we have, so that we have a complete end-to-end service offering. And, of course, we further defend our lanes, meaning that also there we have a higher focus on mid-sized clients, and also we are actively looking at a couple of additional inbound services that we can develop in the coming years. From here, I will then hand over to Philippe, who will lead us through the results.

Thank you, Chris, and good morning to all of you. As you can see on the highlights on page 5, our group operating income for Q4 stood at 1,335,000,000 euros and increased year over year by close to 10%. At constant perimeter, excluding the 240 million consolidation impact of Stasi, our operating income decreased by 8% on 96 million. Many due to ongoing pressures in North America, lower press revenue tied to the new press concession started on July 1st, while on the other end, domestic mail remained resilient with less than 3% decline in revenue, and our domestic parcel revenue moved by more than 7%. Our group adjusted EBIT at 84 million euros with a margin of 6.3%, or at 57.6 million euros, while excluding the 26.4 million EBIT contribution cost us. On the like-for-like basis, this represents a decline of 16.5 million compared to last year. In line with Q3, and as Chris has just explained for the full year, the decline is mainly attributable to price, where the lower revenue has a direct impact on EBIT. And, to a lesser extent, to North America, where our peak management and our property gains helped attenuate the top-line pressures. Before diving into the financial performance of our business unit, You will note on slide 6 that our reported EBIT amounts to a negative €223 million, which mainly reflects the €300 million internal loss on retail, as mentioned by Chris. Let's move now to the details of our three segments. I'm on page 7 with the last mile segment. We see that revenues declined by €24 million to €591 million. In line with Q3, domestic mail recorded close to 28 million declines in revenues, of which 21 million are coming from press, mainly due to the new contracts with the editors following the end of the press concession on June 30th. Excluding press, mail recorded an underlying volume decline of 8.1% for the quarter. with a good resilience in advertising mail thanks to our commercial efforts and contribution of new customers. The decline in mail volume led to a revenue impact of minus 19.2 million euros. Overall, though this was partially offset by a positive price and mixed impact of plus 5.3% or plus 12.6 million euros. As a result, the domestic mail revenue decline was limited to under 3% or roughly minus million year over year. Parcel's bedroom recorded in Q4 an increase of 10.7 million euros in revenue or plus 7.4%. Parcel volume grew by 6.9% year over year, following 8.7% in Q3, and marking a strong uptick compared to the plus 2.9 and plus 2.5% growth in Q1 and Q2 respectively. The strong volume growth was driven by significant contribution of major marketplaces within our customer's portfolio and their strong outperformance relative to overall market growth. This brings our full year 2024 volume growth to plus 5.3% despite ongoing challenging market conditions including negative consumer confidence index in 2024 with further deterioration in the fourth quarter and inflation in Belgium still exceeding 3% and facing continued upward pressure. As our volume grew, growth was mainly driven by large customers, the price mix only improved by plus 0.6% in Q4. Proximity and convenience retail network revenue decreased by €4 million, with lower banking revenues offsetting the indexation of the management contract. and revenues from value-added services remain operationally stable. However, this was offset by the repricing of state service, which is now accounted for within value-added services instead of in other revenue, as in the previous year. This is the last time we will have to represent this restatement, as from now on, next quarter onwards, we'll have again a clear view of the performance without this reclassification impact. Our personalized logistic framework at Dyna remains nearly stable in the quarter, supported in the mix by a recovery of both one-man and two-man delivery. Let's move now to the P&N of Last Mile on page 8. In our inter-segment and other revenue, besides the restatement impact of repricing in this state I just explained, we have on that line some high-tech segment revenue from inbound cross-border volumes handled in the domestic network from the cross-border segment. Altogether, this brings our total operating income down by 3.6% or minus 23 million. On the cost side, our OPEX, including T&A, slightly decreased by 1.9% or 11 million euros, mainly driven by, on one hand, some high salary costs as our cost-post FTE increased by 3.4% year-over-year following the impact of two salary indexations in December 2023 and June 2024, while FTEs slightly decreased despite higher parcels volume, and on the other end, lower cost of sales and lower DAB. To summarize, our adjusted EBIT declined by 11.5 million year-over-year, mainly due to a drop in price revenue, while the residual mint revenue and the solid parcel volume growth could not fully compensate the increased payroll cost driven by inflation. Moving on to 3PL on page 9. 3PL revenues increased by $151 million but declined by $62 million or minus 15% while excluding the $240 million contribution from Mustassi's consolidation in the quarter. In 3PL Europe, a constant parameter, regular and active end sales were up 14.6% year-over-year, continuing the trend of previous quarters. This growth was fueled by customers' onboarding as part of our international expansion efforts and upselling activities targeting existing customers. In 3QL North America, revenue decreased by €69 million. A constant exaggeration, this corresponds to a decrease of 20% in line with previous quarters. as the lower sales from existing customers and the in-year contribution of new customer wins cannot compensate the client churn we announced last year in the context of economical softness and market overcapacity. Let's move to the P&L of 3PL on-site. Excluding Stasi, while the operating income decreased by 14.9%, our operating expenses and DNA decreased by 15.3%. primarily driven by lower variable OPEX in line with Radial US revenue trend and a sustained improvement of Radial US variable contribution margin rate. Our VCM has increased by around 5.5% year-over-year, reaching a record high in peak period and delivering an impact of around $18 million compared to last year. Year-to-date, this corresponds to a cumulative efficiency gain of more than 45 million. These efficiency gains help alleviate the top-line pressures of minus 62 million, and we see that at constant per meter, we manage to protect our adjusted EBIT with a limited EBIT decline of 1.3 million, bringing it down to 20.2 million. In terms of reported EBIT, we see that the 300 million impact related to the implement on regular US brings the bull value from 912 to 612 million euros. Regarding Stasi, the EBIT contribution totaled 26.4 million with a margin of 12.3%, clearly highlighting the strategic importance of the acquisition to the group's performance. Before moving on to our cross-border activities, I would like to take a moment to show you the performance of STACI and Radiant US. On one hand, STACI has only been consolidated within the group for five months, and we want to provide you with more perspective on its full year performance. On the other hand, Radial US has faced top-line pressure over the past two years. We would like to take a step back and put it into perspective, the impact of the protective measures that we have implemented. Let's start with TASI on slide 11. In the first graph, we illustrate three years of random progression from 23 to 25 with a GIGA of approximately 3 to 5%. This is fully in line with our plan, despite a slight slowdown in 24 when Stacey was still focused on its tail process until August, as well as some deceleration during the integration phase of their acquisition in the US, where the growth strategy now seems to be back on track. Looking forward, beyond 25, we anticipate a gradual acceleration in growth, reaching to its full potential in 2027. This will be driven by cross-selling opportunities between Stasi, Retail Europe and Actifence, and also other parts of the group, leveraging the complementary of our P2C e-commerce logistic and P2B offering as well as our geographical footprint. Also in this graph, we see the EBITDA margin under French GAAP 3.516, so excluding the leasing impact. Given Stasi's local accounting framework, this is the only common metric that will allow us to benchmark several years of performance before and after the acquisition by people as we report on the IFRS. we observed that the margin was around 12.5% in 2023. And after a slight decline in 2024, linked to the transition phase I just mentioned, we expect margin improvement towards up to 13% in 2025. To benchmark, this is an in-RFRS framework that we are familiar with. The second graph shows that this local gap APT margin translates into RFRS APT margin of nearly 20% for the five months consolidated in our RFRS account, which outperforms, as Chris mentioned it already, industry margin in logistic industry. In terms of capex intensity, we are around 2% to 2.5% of revenues. And finally, it's also worth noticing that part of the rationale behind this acquisition was to unlock value creation at Radial Europe and Activance by leveraging stasis management expertise and people's competencies in e-commerce logistics. We see strong potential for both growth and profitability in this area as well. Now turning to Radial US on page 12. For several quarters now, we are delivering the same message. We are experiencing revenue pressure, and we are working on productivity improvement to mitigate the impact on APTA and EBIT as much as possible. Taking a step back and looking at several years of data, this is exactly what the following graph illustrates. We can see a continuous improvement in IFRS margin, increasing by 9% from 3.1%. Five years ago, to 12.1% in 2024. And despite a 390 million revenue decline, equivalent to 28% over two years, EBITDA has only decreased by $20 million, thanks to a strong focus on cost management and productivity enhancements. As Kay just mentioned, the recent customer departures we have learned recently We put additional pressure on revenues in 2025, and despite our commercial redeployment efforts targeted to mid-sized customers in the diversified port verticals, we will not be able to reverse the trend in the short term. Now, our focus is not on size, but on profitability and resilience of our portfolios. To put this in perspective with the 3PL US market, some industry reports indicate that the market contracted by approximately minus 20 to 25% in 2023. Our case is therefore not an isolated one. Additionally, other sources' project research show a growth towards 2030 with a high single-digit figure. We are therefore convinced that we will emerge from this downturn better equipped, thanks to efficiency improvement and a more robust and rebalanced customer portfolio. Finally, in terms of capex, we see that compared to Stasi, Radial US has a higher capex intensity, around 4-5% of revenue. Over the coming years, we will work towards bringing this down to the range 3-4%. while continuing to refine the profile of our customer portfolio. Moving on now to our cross-border business on page 13. Cross-border Europe revenue rose by 2.4 million or plus 2.4%. This growth was driven by increased volume from China to Belgium, our expansion efforts in Europe, and improving market conditions in the UK. This was nevertheless partially offset by Asian consolidators shifting away from untracked services where we are well positioned. Similar to previous quarters, our top line in North America remains under pressure. Cross-border North America revenue declined by 15.3 million euros, or minus 18%. as Landmark Global reported its eighth consecutive quarter of year-over-year revenue decline and continued to face commercial headwinds. However, this was partially mitigated in the quarter by strong peak volume growth, further boosted by a volume transfer during Canada's post-strike. Overall, our global cross-border operating income increased by €13 million, or 7% year-over-year. As shown on page 14, our OPEX and DNA decreased at the same time by 5.8%, reflecting lower volume-driven transportation costs, reflecting lower North American volume alongside higher volume shipped to Belgium, which has a positive impact in terms of mix. and slightly higher salary costs tied to the ramp-up of our international activities, inflationary pressures to the extent absorption of unexpected peak volume tied to Canada post-strike. Overall, from a profitability standpoint, the 4 million APT decline and year-over-year margin dilution reflects ongoing challenges at landmark US. Moving on to the corporate segment on page 15. Both the external operating income and the next OPEX and DNA remain stable despite higher FTE and inflationary pressures resulting from two salary indexations. I just did a bit, therefore remain stable at around minus 10 million. And let's move to the cash flow on slide 16. The main items to flag here are the following. Cash flow from operating activities before changes in working capital stood at 160 million and increased by 30.57 million versus last year, mainly reflecting higher EPTA generation. Change in working capital and provision stood at plus 96 million. This variation primarily stood from a shift in account receivables due to the termination of the press concession, which was typically settled in the following year and was still recorded on the balance sheet last year. The net cash outflow from investing activities totalled 63 million, which came back reaching 64 million for the quarter. On a full year basis, CapEx amounted to 147 million, aligning with our 150 million guidance. This guidance has been tied up by 30 million from our initial outlook, reflecting the financial discipline amid unfavorable market conditions. This item constitutes the main variation of our free cash flow and at the level of the net cash outflow from financing activities that amount to minus 75 million, an improvement of 126 million year over year, driven by the repayment of our term loan in December last year and higher payment related to lease liabilities in 2024. This brings us to the strategic priorities. Thank you, Filip. As you can see, we faced in the early part of the year a couple of important challenges.

First of all, there was in the context of the social unrest in Belgium, mainly driven by an overall social climate with the new government, we had a strike that impacted the company And secondly, of course, the churn of a few clients in the U.S., of which one enterprise-sized client made as well, in fact, and led to the impairment. That being said, I think that we have also many positive elements that also reinforce for us the confidence that we have developed last year, the right strategy, a strategy in our portfolio and also to be focused again and reconnected to growth of this company and profitable growth going forward. And for that, we are now convinced that 2025 will be a year where we will accelerate that transformation of the company to ensure that we have that. What are the highlights that we already have seen this year? First of all, Stasi has been for us a real good acquisition that we've done, both on the side of the speed that we do today, the integration with the rest of the business, but also in their organic business, we see a very rapid good conversion of their sales pipeline in the early months of this year, which makes us very optimistic about the further forecast of this company. Second, we have had the best week ever. We focused last more resilient and peak performance end of year, both in North America and in Belgium. We've seen that we have treated much higher volumes at high quality. So we see that operationally, this company is fit to do the things that they need to do. So we're very enthusiastic about that. And lastly, we launched a couple of pilots, some of them that are now in the evaluation state. And there we see as well very promising elements that make us believe that the transversal capabilities that we have can lead to solutions that are value-adding to our client and also, of course, value-adding to the group. And that's where we want to focus the growth of the company. perspective, we also will take a couple of steps now to reinforce the group. First of all, we will integrate the BPOST group management with the BPOST Belgium management, meaning as well that I myself will take the BPOST Belgium CEO position as of May to have even a more strengthened focus on the transformation of this company because of course an important part of the people's group transformation will be situated in belgium and it's important that we put such an effort also there will be exco members being focused fully on the operations in belgium and all the commercial success within belgium and we really look forward to accelerate with that the transformation and secondly We had an interim CEO, Craig Simon, in the U.S. We did an excellent job in managing the company and helping us to further increase efficiency in that company. Of course, our portfolio is still in transition, but we're happy to announce that Thomas Schmidt will join the company as of the 17th of March. And after the transition period between Craig and Thomas, he will take the helm in Radial U.S., in the portfolio and the shift towards the mid-market. If we then zoom in on the different businesses that we have, so within the 3PL, we launched a new organization that fully integrates now Stasi with Radial Europe and Active Ends, and there we see a lot of capabilities that complement each other and so we can now offer even more adequate solutions to our clients using the best of capabilities to bring to those clients and secondly we also ensure now that we have those same methodologies that Stasi has in building up a profitable resilient client base that is multi client on a warehouse that is a capability that we're bringing in on the other side ensuring that we have the same resilience on our different warehouses. North America has said we will soon onboard our new CEO and also there we will accelerate with radial fast track the onboarding of mid-sized clients. It will take some time. As we have said already six months ago, we have a portfolio which still has vulnerabilities towards enterprise-sized clients that will move over time. But what we see is actually that with the progress over the coming months, we will see that this risk is going down and that those clients are complemented more and more with smaller-sized clients that give us less vulnerability on that market. In the last mile, as I said, we will reinforce the leadership in that organization. We will have a strong CEO focused on the transformational tasks that we have within our operations. We will also have a CCO dedicated to that, and I will myself take over from Jos de Monville in the month of May to ensure also that the transformation is driven through in that organization. We continue to launch pilots, pilots that integrate the full capability also including the capabilities of the other PUs to ensure that we have a strong offering towards the segments that we don't serve yet, the B2B and the C2C segment. And also we triple our capacity in lockers to ensure also that we have a 24-7 offering for all our clients. And then finally, for the retail network, we are in preparation of the aid management agreement to ensure that we have a good offering that we can negotiate with the government in the second half of this year. And on the cross-border side, we also will focus on more mid-sized clients in the existing lanes to ensure that we can combine our cross-border offering with retail. the last mile areas that we have. So both in Belgium and in Canada, we have a last mile offering and we see that that is a very attractive offering for our client. And second thing, what we do is we combine the cross-border activity with 3PL activities. And there we have products like, for instance, launching new markets of certain oversupply. So we have today people that use our 3PL capabilities in a certain market and then ask us that in a startup of a new market, that we help them with cross-borders. to bring the parcels to this market and ensure that they can start before they're investing in real 3PL capabilities in that new market. And finally, of course, we will, of course, open new lanes. We are opening, as we speak, new lanes that also are supported by the Stasi presence in certain countries in the south of Europe. And so we look forward to a year of transformation. A lot of things will happen in the coming year. We have seen in the... The figures that we have that were not yet fully there, but on the other hand, that were on the right track and that we look forward, that this year will prove that we are on the right track and that we will make big steps towards a parcel-sized logistics leader in the European and North American market. And I give now the word back to Philippe so that he can give us the outlook for 2021. Thank you, Chris.

You have heard that transformation is a complex and lengthy process and we cannot expect immediate results. From a financial perspective, 2025 will be a challenging year. While our transformation is well on the way, we are also facing external headwinds, both anticipated and unexpected, over which we have varying degrees of control and whose impact we can only mitigate to a certain extent. However, This must not distract us from our objective. We remain resilient and stay the course. The contribution of Stasi, one of the first visible positive effects of our transformation, will help us navigate the challenges ahead. In Belgium, where we are managing the disruption caused by the end of the press concession in 2024, and more globally, the necessary reorganization in response to mail and parcel volume trends and evolving customer needs. In North America, where with a difficult market environment, we are also dealing with the unexpected loss of enterprise customers that we will address with the implementation of additional cost-cutting measures and rebalancing our customer portfolio. While the group's total operating income is expected to grow by a high single-digit percentage, the group adjusted EBIT in 2025 is expected to range between 150 to 180 million, a decrease of 45 to 75 million year-over-year, despite the full-year contribution of Stacey. For the last-mile segment, we expect a slight decline in total operating income, reflecting a further €55 million reduction in price revenues due to the new price contract that replaced the price concession as of July 1. As a result, the year-over-year decline is expected to be more pronounced in the first half of the year before normalization from July 25 onwards. Lower main revenue from transactional and advertising, given by a structural main volume decline of between 7% to 9%. Only partially offset by price mix impact of between 4% to 5%. While the price increases are intended to offset some of the volume decline and inflationary pressures, they can only partially mitigate this combined impact. While on the other end, parcel revenue are expected to grow, benefiting from an underlying volume growth in the mid to high single-digit range, complemented by low single-digit price mix improvement. However, it's important to emphasize that this does not account for any direct or indirect commercial impact after strike we face in January, as Chris mentioned it, since it's still too early to quantify them. As a reminder, in response to our planned recognition of deliverance, aiming at aligning with evolving mail and parcel volume, our postal workers went on strike. What began on February 5th with a few localized distribution centers gradually escalated, spreading in Wallonia to other distribution centers, and ultimately leading to shutdown of three of our five national sorting centers. The strike only ended last Wednesday evening on February 19. During that period, some passes volume were redirected to competitors. which, beyond this direct impact, could have long-term consequences if they do not return totally or even partially to the post. We have now cleared the majority of the backlog accumulated during the strikes and are very closely with our teams working to restore service quality and rebuild customer trust. Adjusted EBIT margin is expected to range between 2-3%. Beyond impact of structural may decline, this reflects margin erosion from the new press contracts. As we mentioned by July, with the gradual transfer of volume to AMP, it's expected to align margins more closely with those on the press concession. Nevertheless, in the early stages, we could not absorb the impact of lower price revenue on EBIT. The impact of two additional salary indexations of 2% each Depending on the timing of the secondary taxation later this year, this currently represents an estimated cost increase of more than 30 million. The third element is delays in plant reorganization due to the strikes affecting our efficiency improvement targets. These headwinds highlight the urgent need to move forward with our urbanization efforts in Belgium. For the third-party logistics segment, we expect revenue growth of between 20% to 25% in 2025, primarily driven by the full-year contribution of TACI compared to only five months in 2024. On a pro forma basis, Stasis is expected to grow by a mid-single-digit percentage in 2025. While our European e-commerce statistics activities are expected to remain on their growth trajectory, we anticipate a net revenue decline that regains US. This reflects the impact of recent enterprise customer losses we have just informed you of, and the contribution from new mid-market customers, which is not yet sufficient to offset those losses. From a NABIC margin perspective, we expect a range of 4 to 6% for the segment. Stasis margin is projected to be between 10 and 12%. At Radial, we will continue to accelerate productivity gains, building on the strong progress we made over the past quarters. and will further reinforce this with additional cost reduction measures to help mitigate the impact of top-line pressure. At Cross-Border, we anticipate a mid-single-digit organic revenue growth, driven by a gradual top-line recovery, a flying landmark in the US, supported by customer wins, as well as continued growth in Europe and Asia, with notably the expansion of new leads. The EBIT margin is expected to remain in the 11% to 13% range, reflecting slight dilution due to a shift of product mix with higher commercial revenue and lower postal revenues. It's important to highlight that our guidance does not yet account for any potential impact from the U.S. tariff on Canada announced on February 4th. The scope and their potential effect are still uncertain and their implementation is currently on hold as negotiations are still ongoing. At the corporate level, we anticipate higher payroll costs due to salaried taxation in Belgium compounded by an increase of FTEs and high operating expense to support our transformation initiative. Finally, we can expect our gross capex to be around 180 million. Growth capex remains a key priority to build our future, especially in the context of our transformation. However, given the current challenges, we will deploy growth capex investment as in the past, within strict financial discipline and produce. We are gaining the necessary perspective on the operational, strategic and financial implications of the recent events. We will reflect them in our projections and plan to hold a capital market day beginning of June this year to present our strategy and financial trajectory in more detail. We are now ready to take your questions. Again, two questionnaires will allow gets a chance for everyone to be addressed. in the coming 30 minutes. Operator, please open the line.

Ladies and gentlemen, as a reminder, if you would like to ask a question or make a contribution on today's call, please press star 1 now on your telephone keypad. And to redraw your question, it's star 2. Also, ensure your line remains unmuted locally. You will be advised when to ask. ask you a question when to speak. The first question comes from the line of Michel Declare calling from KBCS. Please go ahead.

Yes, hi. Thanks for taking my questions. The first question would be on the Benin last mile. I'm just trying to understand the guidance a bit more there. If I take the midpoint of your EBIT guidance and assume some revenue declines there. There is quite a big step down in the absolute adjusted EBIT of around 70, 80 million, according to my calculations. I understand, of course, that there is a bit of an impact from the press. I would assume 30 million as what you have seen this year as well. But this still leaves a big gap, especially given that you also will likely have some tailwinds from the reversal of the strike impacts last year as the strikes from this year are not yet included. So this all seems a bit like an acceleration in the profitability decline. I'm just wondering what is driving this acceleration and maybe can you also elaborate a bit on what your current estimate would be on the strike impact in Belgium for this year. Last year we had 11 million, but this year it takes a bit longer. So I think the impact will be a bit higher. And yeah, just looking forward towards, let's say, 2026 with mail volumes further decreasing, have we come at a bit of a tipping point? What measures are you taking there? So that would be my first question. And just on the third-party logistics, if I look at your outlook and the growth forecast for Stasi, I would assume that, based on some maps, that you expect Radio US, again, to decline by at least mid-teen levels. I'm just wondering, is this roughly a correct assumption? And if you can talk a bit more about the loss of these big customers and which were unexpected, of course, and maybe also on the customer wins of SMEs. Is that going a bit as planned or is that also lagging? Those would be my questions, please.

Mr. Can you compliment? So, on the last mile, indeed, what we expect in 2025 is again an impact of the press concession. Also keep in mind that we are transitioning from one model to another model and there is always a lag between the moment we see the decrease in volume and the reorganization, the alignment of the construction that we could apply. There is always a lag and this will still heavily weight on the profitability in Benin last mile. The male will continue to decrease, not only in terms of natural trend, but also the price mix is only 4% to 5%. So the net of the two will be negative, while we had in certain previous years an offset from the price to the volume decrease. We will not expect that one. On parcels, the underlying volume, I expect it, of course, to increase. No discussion on that one. So, indeed, as you rightly pointed out, it does not include an impact of the strike. And I want to come back on the amount that you mentioned of 11 million in 2024. Just want to remind that these 11 million were referring to a four-day strike. We are in a totally different scenario right now. And what is really important to keep in mind, there is not only the volumes that we have lost during the strike, meaning that have been redirected to our competition. our competitors, but there is or there might be a mid to long term impact in the sense that with speed these customers will come back either totally or partially and that it's really too early to assess it. So if you allow me, I would not make a quick computation saying 11 for four days, and you would multiply it for the number of days that we were in strike this year, because it's by far more complex this time, since it might have more impact on the midterm on customers. The question on 26 for mail, we do not expect a slowdown in mail decrease. The trend should be the same. Nevertheless, as Chris mentioned, we are investing to rejuvenate or to add functionalities to the mail product that remains a very profitable product. Adjusting also our sales to the customer needs that should also partially help reducing the speed of the decrease. When it comes to your question on 3PA, yes, we expect a decrease of the top line of radial in the US. It will be more than what you were expecting. It will be more in the 10% to 20% range. I think I covered most of it. Maybe you covered it. Yes. On your tipping point in mail, I think it's at this point still a bit too early.

We, of course, are preparing for a new USO discussion with the government going forward. That being said, today we still see that mail, although the decline, remains for us a profitable activity. That's also why you that profitability, which is good, that we do some level of defense that will not say that we're naive, that they will not decline, but that we can slow down the decline to some extent. And of course, obviously, now we have an operational model, which is dense, non-dense, and we think that this is still profitable until the end of the current uso. And now we are doing the reflections on what would it mean going forward in case that the decline is continued, as it's said, and likely that is the case, of course, as we see that the same is happening with other postal operators. There may be on the side of radial on What has happened there? We can, of course, not mention client names, but it is the vulnerability that we have discussed last year. So we said that Radial in the COVID period has taken on board in at that moment a low capacity marketplace. a number of enterprise-sized clients, which in the moment that they churn actually create for us a cost that we, on the one hand, operationally very good are in reducing, but there are a couple of fixed costs that we cannot reduce that fast. That is part of the portfolio that we have over there. And so we can just mention that one of those enterprise clients that used us as a swing capacity just recently stopped its operation or will stop its operation with us. And so So that has the impact and that lets it do the impairment combined with some less relevant clients compared to this situation. Therefore, we are convinced that this transformation that we're doing in the U.S., which is a transformation towards multi-client sites where we operate for mid-sized clients, is really the right one. We are, over the last year, we have worked on an operational model that works. We also have worked on a tech stack. We are piloting it as we speak. So we have signed up a number of clients that do the pilots together with us. These are new clients with whom we're doing this. And also we have actually a very extensive client pipeline of potential clients that could be signed up. But this is, of course, something that will be accelerated at the moment that we see that Our tech stack is doing what it should do and is creating the value that we're looking for. And then we will, of course, full force focus on that in a market where, of course, the change of the president can play in our advantage or disadvantage. Something also that we have something that we will have to look forward to. for how we manage that going forward. At this point of time, it looks at least that for the activity 3DL that we have in the US, there might be some opportunities for local brands to further increase it. Of course, other businesses from our side could be challenged based on cross-border tariffs.

Okay, that's very clear. Thank you for the comments.

The next question comes from the line of . Please go ahead.

Hello. Good morning. Thanks for taking my questions. I have a few. First, on Radial US, can you quantify the revenue contribution from new SME clients? And then on cross-border, Can you explain more in detail the impact of Asian consolidators shifting away from the truck services, the impact on cross-border division, and how should we think about that in 2025? Also, how do you see the potential impact of potential regulation on non-EU parcel volumes? Then on out-of-home parcel delivery, which is... an objective for you. I think you have close to 1,300 locations of lockers in 2024. How are you thinking about additions in 2025 and do you see competition heating up in this space? And then lastly, on cash flow for 2025, how do you see working capital given in 2024 I think you had a contribution if I'm not mistaken, close to 40 million euros. So how should we think about the impact on cash? Thank you very much.

Let me maybe first take the business questions and then hand over to Philippe to complement it with some financial figures. If you look at the revenue contributions for new clients in 25 in a radial US, we're very conservative at this point of time, given the fact that we're in the piloting phase. So we are optimistic about that, but it's a bit too early to radiate that optimism already in the figures. And why is that? We're piloting as we speak. We see a nice pipeline of clients that could be interested in that, but of course, it's only the success of the pilot that will actually put us full force into starting to onboard these clients. And if you then look at the timeline of these things, now we think it's something where you will see the initial success that we can probably show. In fact, it will be beyond 25 horizon. A couple of elements you probably will see in the peak of this year if we have some of these clients. But the real impact is actually for a bit later, just because of the state where we are in that transformation. If you look at the local capacity, we wanted to take the financial part on that one.

So I would like to propose you the following answers, is that if I compare what we have added as new customers in 2024 was roughly 40 million euros, which is mostly to mid-sized customers already, even if it was not under the new format or the new pilot that Chris explained. And considering a prudent deployment or implementation or adaptation of this one, you could make yourself a guess of what we could be, if we have included it in the 25 figures.

Then I move to your question around the log capacity. In terms of number of locations, we more or less doubled this year, and in number of capacity, we tripled this year because we have a higher focus on large-scale parcel machines. And secondly, We also shifted the location strategy towards those areas where we see that clients are really looking for 24-7 solutions, while I would say what has been developed over time was more a testing across the full geography. We really have a very focused strategy. towards those areas where we have most of the clients that are looking for an out-of-home delivery option, which is not, let's say, equally participated over the geography. And so that's for us important that we focus on that. And yes, indeed, I think that having an out-of-home solution, everybody knows that that becomes critical if you want to be a good parcel logistics provider. So you see that Other of our competitors also are looking at that. I think it only confirms the fact that this is the right direction and we will for sure do everything to be in the lead of the pack in this development.

So there was an additional question on cross-border, which is the trend where Chinese platforms move away from a tracked product, which is something we go very strong in, into untracked product that we could also offer, but we are not the only one on the market. So, meaning it opens more room, gives more room to the competition on that one.

I think with that, we have... Thank you.

No, just... An additional, I think there were two other questions, one on potential regulations of non-EU parcel volumes, and another question was on working capital. And I know I'm asking a bit too many, but if I can, one just on Radio US, just to help us understand where things are. Can you give us a measure of what is the current warehouse utilization? Is it like below 50%, 70%? I think to have a decent profitability, you need at least 90%, if not 90%. So just to help us understand where you are right now. Thank you.

On the EU, we'll see how it comes. It's difficult for us to predict what could happen. On the retail, what I would say is we are not in the 90%. Would we be in the 90%? I think profitability would be higher than what it is right now. We're also above the 50%. I think you announced a number which is not too far away from reality, but I would also be careful with that one because if we are operating a warehouse that doesn't belong to us, which is the case in some of our customers, it could boost inside the utilization of the capacity. And the flip side of the capacity non-utilization is the cost that we have to bear and the revenue that we could pay to our customers. When we operate in our warehouse for a customer, yes, we use it full, but also the cost are also paid and the price of the customer. So it doesn't fully reflect the impact on profitability and risk that we are bearing on this portfolio. But indeed, we are not at the 90%-ish. We are more in the 70s, as you refer to.

Thank you. And working capital, thank you.

I suggest that when you take it with Antoine, he will try to detail it after this call.

Okay, yeah, for sure. Thank you very much. Have a good day.

Welcome.

Ladies and gentlemen, as a final reminder, if you would like to ask a question, please press that one. Now, the next question comes from the line. Mark Zwartzenberg calling from ING. Please go ahead.

Good morning, everybody. A couple of questions left. First, on the trend that you see in the parcels business. So September was still up double digits. It now is high single digits. Can you give a bit more color how the trend that's in Q4 and into Q1 this year and what we should expect a bit going forward? That's my first question. And then a question on Stasi. You're guiding for an EBIT margin of between 10 and 12%, if I'm correct. IFRS, that is. How many synergies are in that number that you foresee already for 25? And then my last question is, a bit on the balance sheet and the cash flow. Do you think you will be cash flow positive in 25? And linked to that, the leverage ratio based on your guidance and probably the guidance will be even a touch lower with the strikes in there. Yeah, it seems that your leverage ratio will go to four or five times. Would it be an issue for your lenders or any confidence you want to have in your bonds?

Okay, so I start in the order you asked me to jump in, Chris. Yes, parcels grow sometimes, goes up and down. It depends quarter to quarters. I think it would be premature to comment on what was happening in the first 10 or 8 weeks of the year, especially in the context of the short-term experience, but we will for sure come back in detail when we will be announcing Q1 results. So, Stacey, indeed, we are guiding between the 10 and 12%. One second.

Hold on, hold on. You can maybe give a bit of a color on the parcel volumes because we had December and January as well without strikes. So can you give a bit more color there?

Well, what you've seen is that in peak there was a quite strong increase of parcel size. So there you clearly are at the higher single digit level that you were on the peak performance. Of course, if we then see over the full year, that might be a different picture because concentrating around these sales periods where parcels are. So it's not necessarily a full representation of the reality that we have. But what we see in the market is that we still have on that dimension, well, I'm not talking about the US market, but in the European market, we see higher single digits that we still see today happening also with our clients. If we look at same store sales, we still see that the increase is in that range, especially in those ones that can benefit from platform effects.

which are growing faster than the market.

So we're still trending on high single-digit growth, is that what you're saying? That's what we see.

Of course, if you look at the US, there you've seen a same-store sales which has been slightly negative over the last period, so that is something that we've seen. Most of the analyst reports that we see on that market is that there's an expectation that that trend will be reversed soon, with some unclear starting dates of when that will happen. At this point of time in our fulfillment activity of the clients that we have, we don't see yet the shift of the same store sales trend that we've seen. So that's something where probably in the coming months we will have to report further what's happening in same store sales. And as well, of course, when we onboard new clients, we as well can't report on what we see happening with those new type of clients.

So on Stasi, the 10% to 12% range is indeed what we are guiding on. There is some synergies into it, but they are still limited. They will materialize more in 26, but there are some included into it.

So we should maybe assume that you have 1% of synergies, let's say, as it's a high single digit to low double digit EBIT number. Is that a bit the number we're looking for? Because the initial guidance, I think, was between 11 and 12, so... We came down a little bit, so that is the underlying margin a little bit softer. Is that correct to assume? Not really. Not really.

No, no, no, no, not really.

Okay.

So the other way of saying it, the upper part of the range is still the same, so we are still confident in the level of margin that we benefit yielding from Stasin. Your question on the balance sheet and the cash flow. Yes, the cash flow will be positive in 2025. Indeed, it will have an impact on the average. Maybe not to the extent that you are mentioning, but indeed it will have an unfavorable impact. And your question on the loan. No, there is no impact whatsoever. there is no confidence attached to any leverage or rating or any condition in the shape or form on the bond that we should last for.

It also doesn't trigger higher interest payments?

No, no, fixed rate.

So, okay, so the cash flow you said is positive in 2025?

Yes, yes, yes.

All right, thank you very much.

Thank you.

Ladies and gentlemen, there are no further questions, so I will hand it back to Chris to conclude today's conference. Thank you.

Well, 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. And please note also that we will release our annual report 2024 on March 26th. And we will soon announce the exact date, early June, of the Capital Markets Day. And we look forward to stay in touch. And our first quarter results will be released in May. Thank you very much and have a nice day. Thank you.

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