bpost NV/SA

Ladies and gentlemen, hello and welcome to the Bnode second quarter 2026 analyst conference call. On today's call, we have Mr. Chris Peters, CEO, and Mr. Philippe Dartienne, 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 pound key 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 and thank you for joining us today. As CEO of Binode, I'm pleased to welcome you to our second quarter results presentation. Joining me today are Philippe, our CFO, as well as Alexandra and Antoine from Investor Relations. The presentation materials were published on our website earlier this morning. We will first take you through the presentation and will then be happy to answer your questions. As always, we kindly ask you to limit yourself to two questions each to ensure everyone has the opportunity to participate during the call. Philippe will first take you through our Q2 financial performance. I will then come back to provide an update on the progress of our key strategic and transformation initiatives during the first half of the year and conclude with our outlook for the remainder of 2026. Philippe, over to you.

Thank you Chris and good evening everyone. As you can see from the highlights on page 3, Group Operating Income for the second quarter amounted to 1 billion 46 million. representing a year-on-year decrease of 46 million or 4%. Most of the decline was driven by people. In addition to the accelerating structural decline in mail volumes, which reached almost 17% during the quarter, parcel volume also contracted by around 9%, reflecting the impact of the five-week strike that took place through April, and which we first discussed with you in early May during our Q1 presentation. At the same time, Paxon delivered solid top-line growth of plus 6.5% in Europe, helping to offset both the impact of the previously-announced customer chain at Royal Eurus and temporary revenue pressure at Stasi Americas. At Landmark Global, revenue was slightly lower year on year, mainly reflecting the impact of the domestic strike on inbound flows from Asia to Belgium. turning to our adjusted EBIT of 29.4 million. With respect to the EBIT strike impact, you can see that our estimate now stands at 25.5 million compared with approximately 15 million when we first communicated on the matter early May, shortly after the end of the strike. Since then, contractual penalties, compensation and other short-term effects have continued to increase the overall impact. Excluding this strike impact, the year-on-year decline was limited to around 3 million euros, which is better than we had anticipated. Indeed, despite the termination of the 679 activities and the accelerated decline in mail volumes, Weighing on BIPO's profitability, Group's underlying performance remained relatively resilient. This resilience was supported by continued EBIT growth at Paxson, despite ongoing top-line pressure in the US, as well as by the positive contribution from the reorganization and operational measures implemented in Belgium. While these factors were not sufficient to offset the exceptional risk impact, they demonstrate the continued effectiveness of our transformation initiatives and the underlying strengths of the business. The strike impact nevertheless has a material effect on our full year outlook and take us below our initial guidance range. Chris will come back to this point in details in a few minutes. Before turning to the performance of our business unit, let me highlight, as shown on slide 4, that beyond the evolution of EBIT, our adjusted net profit benefited from a €19 million improvement in financial results. This improvement was mainly driven by unfavorable non-cash FX effect last year, as well as high net income from our treasury investment this year. These positive effects were partially offset by higher interest expense relating to the bond issued in June 25. With that, let me turn to the performance of our business unit. And now on slide 5, covering B post segment. Revenue declined by 43 million year-on-year to 493 million euros. Domestic mail revenues decreased by 29 million or minus 10.4%. Mail and press volume contracted by 16.8% during the quarter compared to only minus 11.3% last year and 14.3% in Q1. And in line with the mid-teens volume decline guidance we provided earlier this year. The accelerated decline mainly reflects lower transactional main volumes following the introduction of the mandatory B2B invoicing as well as the termination of several advertising contracts. Overall, mail volume decline had a negative revenue impact of around 45 million euros, partially offset by the positive price and mix effect of 16 million euros or 6.4%. Parcel revenues decreased by 10 million euros or minus 7.9% year on year, reflecting a volume decline of minus 9.2% compared to a growth of plus 9.3 in Q1, alongside with a positive price mix effect of 1.3%. As discussed during our analyst call in May, parcel volume declined by around 27% in April as a direct result of the strike. These figures do not include cross-border volume with destination Belgium, which are reported within the LandMax Global that I will comment in a few minutes. Following the end of the strike, we observe a gradual recovery in customer volume, with activity improving week after week. By the end of the quarter, volumes were broadly back in line with last year. However, this means that we have not returned yet to the underlying growth trajectory we were experiencing before the strike and particularly in the first quarter. Turning to price mix, the positive effect during the quarter was driven by a favorable product and customer mix effect during the strike period as large customers did not inject their usual volume. as well as a temporary fuel surcharge. These positive effects were partially offset by contractual penalties and commercial claims related to the service quality issue during the strike. Finally, revenues from other activities, including retail, value-added services and personalized logistics, declined by 4 million euros year-on-year. This mainly reflects lower revenue following the termination of the 679 activities at the beginning of the year, as well as lower revenue from fine solutions, partially offset by higher revenue at Dyna Group. Let's move to the P&L of BPOS on page 6. Including inter-segment revenue from inbound cross-border volume processed through the domestic network, total operating income declined by €44 million or minus 7.1% year on year. On the cost side, OPEX, including DNA, decreased by €21 million or minus 3.9%, mainly driven by two opposing effects. First, we reduced our workforce by approximately 1500 FTEs and interim staff, representing a decrease of around 6.5%. This reflects the benefits of the ongoing reorganization of our distribution rounds and retail operations. Second, these savings were partially offset by higher salary costs per FTE, which increased by 2% year on year following the March 26 salary indexation. This impact was slightly mitigated by unpaid absences during strikes. As a result, the adjusted EBIT declined by 23 million year on year. This includes around 24 million of strike impact, which together with the termination of the 679 contract, more than offset the continued productivity gains delivered throughout our ongoing reorganization initiative. Turning to Paxson on slide 7. As in previous quarters, the performance reflects two contrasting trends. At Paxson Europe, revenue slightly increased by 3% year on year. Across our European businesses and geographies, we delivered a growth of around 6.5% compared with 4% in Q126, with several activities continuing to grow at high single-digit rates. This positive momentum was partially offset by the performance of Stasi Americas, which is reported on the Paxon Europe. Following a contract termination announced in the fourth quarter, year-on-year revenues continued to decline significantly during the first quarter, further impacted by adverse FX effects of around 1.5 million euros. At Paxon North America, revenues declined by 9 million euros. At constant exchange rate, this corresponds to a minus 3% decrease, driven by three factors. First, the expected revenue churn from customers from customer contract termination announced last year. Second, low single digit negative same store sale, although this is a slight improvement compared to the first quarter of 26. And third, these effects were partially offset by the contribution from recently signed customers, which generated around 23 million euro of revenue during the quarter. Let's move to the P&L of Paxson on slide eight. Again, this backdrop, total operating income, remained nearly stable year on year, while operating expense, including DNA, slightly decreased. The development of our cost base reflects the contrasting trends across Paxon geographies, with continued growth in Europe on one end and lower activity level in the US on the other end. Importantly, despite continued revenue pressure in the US, we have maintained a resilient cost structure. Variable contribution margin remained solid, while additional fixed costs and headcount actions continued to support the profitability. As a result, adjusted EBIT increased by €2 million to €23 million in the quarter, driven by top-line growth and productivity gains in Europe and Cost Measures and Relay State Optimization in North America helping to mitigate the impact of the continued top-line pressure. Turning now to Landmark Global on slide 9. At Landmark Global, underlying market trends remain unchanged. However, top-line performance was flat year-on-year as domestic strike at B post negatively impacted parcel volume from Asia into Belgium. Volumes were lost to competition during April and remained under pressure in May while operation progressively returned to normal. On a more positive note, June delivered a strong recovery and growth resume towards end of the quarter. Other European destinations were not impacted by the strike and continued to develop broadly in line with previous quarter. At landmark North America, revenue was slightly up year on year, a constant exchange rate. This reflects on one end modest volume growth in the context of a macroeconomical slowdown, and on the other end, an unfavorable mixed FX driven by a higher proportion of U.S. domestic volumes and lower Canada to U.S. volumes. Overall, landmark global operating income decreased by 2% or 1.6% year on year. As shown on slide 10, OPEX and DNA increased by 3%, primarily reflecting higher transportation costs linked to volume growth as well as higher corporate and ICT charges. As a result, despite underlying growth across most of our commercial activities, adjusted EBIT decreased by 6 million to just under 17 million, reflecting a striking pact of around 1.5 million euros, an unfavorable mixed effect both in Europe with higher share of commercial product versus postal volumes and in North America with higher proportion of US domestic volume and lower US-Canada cross-border flows and higher intersegment charges. Moving on to corporate segment on slide 11. Adjusted EBIT was slightly lower at minus €10 million, primarily reflecting higher marketing and communication and rebranding investment during the quarter. At the same time, we continue to exercise cost discipline, reducing our workforce by around 2% while absorbing the annual salary indexation of approximately 2%. Let me now turn to the cash flow slide on Cash flow on slide 12, sorry about that. Net cash outflow for the quarter amounted to 90 million euros compared with an inflow of approximately 480 million in the prior year period, which benefited from the bond issuance completed in June 25. Excluding this financing effect, free cash flow remained broadly stable year on year. The main drivers were the following. First, cash flow from operating activities before change in working capital amounting to €107 million, representing a decrease of €27 million year on year, mainly reflecting lower EBITDA. Second, changes in working capital and provision, resulted in an outflow of 95 million. Compared with last year, this represents a positive year-on-year variance of 29 million, primarily driven by the timing of terminal due settlement and movement in suppliers' balances. Third, net cash outflow from investing activities amounted to 30 million and remained broadly stable year-on-year. Investment continues to focus on parcel lockers and capacity expansion, the renewal of our domestic fleet and further development of our international e-commerce logistic activities. Together, these elements largely explain the evolution of the free cash flow during the quarter. Finally, net cash outflow from financing activities totalled 73 million euros Excluding the proceeds from last year's bond issuance, the higher outflow mainly reflects the annual coupon payment of 26 million associated with the bond issued in June 2025.