bpost NV/SA

ladies and gentlemen hello and welcome to the b post group second quarter 2025 analyst conference call on today's call we have mr chris peters ceo and mr philippe darcian cfo please note this call is being recorded and for the duration of the call your line will be on listen only However, you will have the opportunity to ask questions at the end of the call. This can be done by pressing key pound 5 on your telephone keypad to register your question. If you wish to withdraw your question, please dial pound key 6 on your telephone keypad. I will now hand over to your host, Mr. Chris Peters, CEO, to begin today's conference. Please go ahead, sir.

Thank you. Good morning, ladies and gentlemen. Welcome to all of you, and thank you for joining us. 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 a chance to be addressed in the upcoming hour. Philippe, over to you for the financials. I'll then come back with a financial outlook and a follow-up on some of our strategic priorities for 2025.

Thank you very much, Chris. Good morning, everyone. Welcome. As you can see on the highlight on page 3, our group operating income for Q2 stood at 1,092,000,000 euros and increased year-over-year by 10.5%. At constant perimeter, excluding the 195,000,000 consolidation impact of Stasi, our operating income decreased by 9% on 91,000,000, mainly driven by the following factors. Persistent headwinds in North America, following contract termination announced in 24 and in the earlier part of this year. Lower press revenue driven by the new press contract that came into effect in July last year, combined with decline in domestic mail against high comms in 2024. Our group adjusted EBIT came at 58.3 million euros with a margin of 5.3%, or 37.7 million excluding the 20.6 million EBIT contribution from Stasi. On a like-for-like basis, this reflects a year-on-year decline of 20.1 million. A constant perimeter, with the exception of our BNI last mile segment where EBIT is down, primarily driven by press as lower revenue has a significant impact on profitability. all our other segments are growing, notably supported by continued margin actions at Radial US, where we managed to absorb the revenue decline and maintain a stable debit. More broadly, at BPOS Group level, the results we are presenting today are in line with our expectations. Before diving into the financial performance of our business unit, you will note on slide four that below EBIT, our financial results decreased by 44 million. This is mainly due to four factors, most of them being non-cash. Within the cash item, we know that high interest expense reflecting the increase in the debt following our bonds issuance in October last year and mid-June this year, and lower interest income driven by lower money market rates and a lower cash balance following the acquisition of Stasi in August last year. Together, these factors account for roughly between 10 and 15 million. As a reminder, following our Capital Market Day, we successfully issued a 750 million bond in mid-June, in anticipation of the 650 million bond maturing in less than 12 months. Through a cash tender offer, we have already repurchased just under 30% of this bond. The remaining amount will be repaid next year using the proceeds temporarily placed in money market instruments, securing a positive net carry compared to the coupons of the maturing bond. Most of the variation in the financial result is linked to non-cash items, including unrealized FX impacts, mainly on our USD intercompany loans and the absence of last year's higher IS19 results. Let's move now to the details of our three segments. I'm on page 5 with the last mild segment. We see that revenue declined by 40 million to 536 million euros. Domestic mail recorded around a 42 million decline in revenue, of which 22 comes from the press, mainly due to new contracts with the editors following the end of the press concession in June last year. Excluding press, mail recorded a sharp revenue and volume contraction this quarter, mainly due to a base effect as last year's performance was uplifted by notably the European, federal and regional elections. made recorded an underlying volume decline of minus 12.4% for the quarter, compared to only minus 3 last year. The decline in main volume led to a revenue impact of 30 million euros overall, though this was partially offset by a positive price and mix impact of plus 4.1%, equating to 10 million euros. As a result, the domestic mail revenue decreased by 8% or roughly 20 million euros year over year. On parcels, our revenue increased by 4 million or plus 3.1% year on year, reflecting a volume growth of 4.1% and a negative seismic effect of minus 1% this quarter. On the volume side, the reported 4.1% actually correspond to the underlying growth of 1.6% when adjusting last year for the volume loss call of the April strikes in 2024. Over the past months, this growth has been mainly driven by the outperformance of marketplace and strong momentum in apparel, supported by favorable weather conditions in June this year. As for price mix, it stood at minus 1% this quarter. When adjusted for commercial one-offs, it's in the low single-digit range, consistent with our full-year guidance. Revenue from our other activities, including retail, value-added services, and personalized logistics, declined by 2 million euros over year, mainly due to the repricing of state services, while Dana Group's revenue remained nearly Let's move to the P&L on last mile on page 6. Our total operating income decreased by 37 million euros or minus 6.2%. And on the cost side, our OPEX, including DNA, slightly declined by 0.7% or 4 million. This mainly reflects lower FTE resulting from a lower mail and press volume and efficiency gains. notably with the resumption after the upper strikes of the organization in our distribution rounds and in retail offices. But on the other end, some other higher salary costs per FTE with a plus 3.4% year-on-year increase driven by salary taxation in June 24 and March 25. Starting next quarter, our performance will be assessed on a like-for-like basis following the end of the press concession in June. This quarter, however, the minus 33 million decrease in adjusted EBIT is mainly attributable to the drop in price revenue and to a lesser extent to lower male revenue against a strong comps prior year. Moving on to 3PL on page 7. 3PL revenues increased by 143 million overall. but declined by 54 million or minus 20% when excluding the 197 million contribution from Stasi consolidation in the quarter. In 3PL Europe, Stasi's revenue remains broadly in line versus last year. Gradient and active end sales were up 13% year over year, continuing the trend of previous quarters, fueled by customers onboarding as part of our international expansion efforts and upscaling activities targeting existing customers. In 3PL North America, revenue decreased by 59 million. A constant exchange rate corresponds to a decrease of 23%. Resulting from revenue churn from contract termination announced in 2024 and early 2025, and lower sales from existing customers, our so-called same-store sale, which offset the contributions from new customer launches, mostly coming from the radial fast-track initiative. Let's move to the P&L on the 3PL on slide 8. Excluding Stasi, while the total operating income decreased by 20%, our operating and DNA were down by 22%, primarily driven by lower variable expenses. OPEX in line with radial US revenue trend and a continued and stronger improvement in radial US valuable contribution margin rate. VCM increased by approximately 6% year over year, reaching its highest level to date and delivering a gain of 10 million euros this quarter compared to the same quarter the year before. A constant perimeter, our adjusted EBIT improved by 6 million euros year-over-year, from minus 5.5 to just breakeven in Q2, mainly reflecting radiance, effective margin action, despite a 23% top-line drop. Regarding Stasi, the EBIT contribution came at 21 million with a margin of 10.6%. Moving on to cross-border on page 9. cross-border Europe revenue increased by 3 million or plus 3.4%. This growth was supported by solid volume increases from China across all key destinations, including Belgium, which helped offset adverse market conditions in the UK. As in previous quarters, our top line in North America remains under pressure. Cross-border North America revenue declined by 4 million or minus 7%, as Landmark Global continues to face volumes of wind, while the broader Turkish environment is slowing down existing business and delaying new business opportunities. Overall, our cross-border operating income slightly increased by roughly 1%. As shown on page 10, our OPEX and DNA decreased at the same time by 2.7%, given by lower volume-driven transportation costs, reflecting lower North American and UK volumes, alongside improved transport rates. This quarter, we also benefited, to a lesser extent, from a favorable cost phase-in, which is expected to reverse in the third quarter. Coupled with the productivity gains in North America, this resulted in a 5 million increase in EBIT. Moving on to corporate segment on page 11. Adjusted EBIT improved by 3 million to minus 8 million as lower consulting costs helped offset higher payroll costs driven by more FTEs and statutory pressure from two salary indexations. Then we move to the cash flow on slide 12. The net cash inflow in the quarter amounts to 482.5 million, mainly reflecting the bond issuance and the cash tender executed in June this year. Besides that, the main items to flag are the following. Cash flow from operating activities before changing working capital stood at 134 million and decreased by 30 million versus last year. mainly reflecting higher APTA and lower corporate tax payment. Change in working capital and provision amounted to minus 125 million. The plus 4 million variance is primarily explained by the termination of the press concession in June last year. As a reminder, under the former press concession, compensation was typically prepaid, whereas the revenue under the new press contract are now invoiced according to the standard billing cycles. This quarter also includes the impact of the settlement of some terminal dues. The net cash outflow from investing activities totalled 27.5 million, driven by our capex for international e-commerce logistics, parcels, lockers in Belgium, and capacity extension in our domestic fleet. This item constitutes the main variation in our free cash flow, And in the net cash outflow from financing activities amounted to 500 million, mainly reflecting the issuance of the cash tender on the maturing bonds, as well as the absence of dividend payment this year. Chris, this now brings us to the outlook and our strategic priorities of 2025. Thank you, Philippe.