Postnl Nv

Good morning, ladies and gentlemen. Welcome to the post NLQ1 2023 analyst call. At this moment, all participants are in a listen only mode and after the presentation, there will be an opportunity to ask questions. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Now I would like to hand over the conference call to Mr. Johan van der Laaschot, Director, Communications and Investor Relations, PostNL. Please go ahead, sir.

Thank you, operator. Good morning, everyone. I'm here in the room with Herna Verhager, our CEO, and Pim Berendsen, our CFO. We will first start with a presentation, the slides of which you can find on our website and also, of course, on the webcast. And we will follow up by Q&A after that. Pim, the floor is yours.

Thank you Jochem and good morning to all of you. Let's start with having a look at the key takeaways for the first quarter of this year. Q1 results came in slightly better than expected, so a good start of the year. This is driven primarily by parcel volumes that developed more favourable compared to our expectations. That is the case both domestically and internationally, and also especially visible in March. The positive trend in our international activities that we already saw in Q4 continued. Next to the volume component, the better performance is also driven by good operational performance and more efficiency in the operations, driven by the adaptive measures that we initiated last year to adjust the cost price per parcel levels to the lower volumes. So efficiency is up and volume slightly better than originally expected. Mail in the Netherlands performed more or less in line with expectations. And all in all, it is a satisfying start of the year for us. Nevertheless, these Q1 numbers are obviously below those of last year. Last year, we still had some weeks of lockdowns. And apart from this, January, February... We're relatively normal months with obviously the war in Ukraine starting on the 24th of February and as of that point in time having significant impact on our performance. Volume at parcels in Q1 was down 6.5%. If you look at domestic only and just for non-recurring COVID volumes, we see a decline of 5%. Male volumes developed in line with expectations being down 10.8% reported and roughly eight underlying adjusted for COVID. Also in the quarter, we're making progress as scheduled in our preparations for our additional plans to save 25 million as of 2024, up to a run rate of 30 million in 2025, by a reduction of 200 to 300 full-time equivalents in overhead and indirect support roles, predominantly at parcels. Looking at the full year, we are on track and we have confirmed our outlook. This is based on the Q1 results that came in above expectations, but still, let's say, in an economic environment that continues to be volatile and uncertain, even though some macroeconomic indicators seem to indicate first signs of improvement. If we then move over to the next slide, On Q1 performance, a bit more numbers there. You see the revenue of this quarter coming in at 783 million euro, a 3% decrease compared to last year. A normalized EBIT at 7, obviously a significant increase compared with the 33 million we reported Q1 last year, which is obviously largely explained by high organic cost increases. with also specifically in this quarter a one-time payment of 1.5 percent of annual salaries for the people in the PostNL collective labor agreement which accounts for 10 million and the total organic cost increases in the quarter amount to 54 million including the 10 million with a full year assumption of 185 million. Our free cash flow was negative The result was, amongst others, a tax payment related to the year 2022, but also the final settlement payment for the transitional pension plans of €16 million. All those payments have now been done and have been settled. Normalised comprehensive income was positive and came in at €4 million. On slide four, we repeat the key components of our strategy. We're continuing to execute on that strategy, which is obviously to be the leading logistics and postal service provider into and from the Benelux, with the three pillars that we talked about before on parcels, mail, and digital next. And if you look at the first quarter, we've made further progress on some of our non-financial KPIs. Today, we have 8 million PostNL consumer accounts, of which roughly 70% are actively used. We're implementing an algorithm that supports the planning of delivery routes fully based on data, which will further improve the efficiency of our network operations. We've now installed 710 automated parcel lockers, which is an increase of roughly 200 compared to the end of last year. We further improved the carbon efficiency of our own fleet by another 6% in the first three months of the year. So all in all, good progress also on the strategic side. The next slide talks about the performance of the parcel segment. There we achieved revenues of 561 million, slight decrease compared to the same quarter last year. As said, volumes were down 6.5% reported, 5% domestically when stripping out the non-recurring COVID elements. Volume decline was offset by price increases and favorable mix. Cross-border continued its positive trend. Logistics was a couple of million below last year, and the normalized EBIT of the segment came in at 5 million compared to 18 the year before, obviously reflecting the organic cost pressure, including the one-time allowance of 1.5% we just talked about. which is partly mitigated by very good operational leverage and good efficiency levels, also related to the adaptive measures that we've taken last year, including the optimalization of routes, staff and our fleet, but also strict cost control on directs. Slide six provides the bridge in the setup that you've seen many times before. So it's a reconciliation of the 18 million results of last year's quarter to the five. And there you see the key components. Revenue effect, 23 million. Positive price mix of 16. The biggest part related to higher prices that we've introduced towards the market. 24 million of organic costs going the other way. Volume-dependent cost obviously as a function of lower volumes, a positive. And also there are other costs to see the operational efficiency improvements on network optimization, et cetera. Other results slightly better and spring down in logistics and other businesses also driven by higher organic costs. Then we step over to the meal segment. Mail in the Netherlands revenue came in at 349 million, a decline compared to 387 last year, obviously driven by a volume decline of 10.8% reported, which is 8.1% if you take out the non-recurring COVID of last year. Revenue was obviously impacted by the moderate price policy with a 5.2% increase in stamp prices as of January 1st, 2023. and normalized EBIT came in at 8 million compared to 36 million last year. Also at mill, we see significant organic cost increases, which also are a reflection of the wage increases. We agreed on the collective labor agreements, obviously also including the one-off payment in this quarter of 1.5%. At the same time, sick leave rates continue to be high, negatively impacting cost and quality levels while we are currently making progress in filling meal vacancies. Cost savings are well on track and leading overall to result in meal in the Netherlands that is more or less in line with expectations. Slide 8 provides the bridge for meal in the Netherlands. 36 million compared to 8, down 25 if you correct for the non-recurring COVID. You see 9 million of cost savings realized offset by slightly lower bilaterals in other costs and in other results. There are some phasing elements in it, but also lower proceeds from real estate sales that account for that. All in all, in line with our expectations. The next slide provides a breakdown on the cash flow. Cash flow, a negative number, obviously driven by a slightly lower normalized EBIT number than last year, and then some changes. Taxes paid predominantly related to 2022 is higher. You see a slight increase in the phasing of the CAPEX. Full-year CAPEX is unchanged at $150 million. a little bit more was done in the first quarter. And you also see the 16 million settlement payment transitional plans at the bottom of the graph, which is the final payment that we've now made. That brings us to some forward-looking awards statements on slide 10. And clearly it is still early in the year, but the satisfying Q1 results combined with the still uncertain economic environment makes that we're comfortable and confident that we can conform our normalized EBIT guidance for 2023 full year within the ranges of 70 to 100 million for normalized EBIT and free cash flow is expected to come in between 10 and 40 million. Also important is that we are well positioned to deliver the step-up in improvement in performance as of 2024 that we talked about at Q4 numbers. And I repeat what I've said in February, the 200 basis points margin improvement prominently from parcels, assuming an upward trend in e-commerce and further based on economic conditions is still what we expect to realize. For the shorter term, we do expect for Q2 a result business-wise that is going to be more or less in line with the result last year. It assumes that parcels volumes will be more or less in line with volumes last year. We expect meal volume to continue to decline in the range of 8% to 10%. we know obviously the impact of collective labor and other organic cost increases we do expect the price mix effect being positive to continue and obviously also the benefits from the pension arrangement will will also continue to contribute quarter after quarter um i think it's important to understand that let's say the around 20 million one-off costs related to the plans to reduce 200 to 300 ftes and overheads will occur in quarters to come so it's not a one-off program but it's split in very different programs to be discussed within the business units and the works councils of those business units which means that there will not be one-off restructuring cash out to be recognized, but it will be phased gradually over Q2, Q3, Q4. And if we know a bit more of the phasing, we will certainly update you on it. But good progress is made. We're comfortable that we'll reach that number of FTE reductions and as well then the savings associated with it. So maybe to summarize, first quarter results came in above expectations, so that's a satisfying start of the year for us. Parcel volumes have developed a little bit better than expected, and we see the positive impact on efficiency measures, operational leverage of the measures that we've taken to improve the margins on the e-commerce side as well. Mill in the Netherlands more or less in line with expectations and some early signs of improvements in macroeconomic indicators, but obviously overall still in very volatile and uncertain market circumstances. Full year assumptions therefore remain the same and we're all on track to deliver our full year outlook. And on that note, Jochem, I'll hand it back to you.

Thank you, Pim. Operator, could you please open the floor for Q&A?

Thank you. As a reminder to ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. We will now compile the Q&A queue. Our first question comes from the line of Michiel de Klerk from KBC. Please go ahead, your line is open.

Yes, hi. Thanks for taking my questions. The first question would be on the nice parcel volumes, so 6.5% decline. I was just wondering if you can give a number on how this compares to the overall market decline that you're seeing, because you earlier mentioned that there would be some market share impact as well. So if you could give some number on this. And following up on this, also your outlook for the second quarter, the flat parcel volumes. Is this a bit in line with the budget that you gave in the fourth quarter or is this actually a bit of improvement? Because I saw that consensus was a bit below that. So if you can give some comments on that. And then maybe for my second question, you mentioned of course that the macroeconomic environment is improving a bit and that you see this also in the parcel volumes. how will this translate in your cost savings and I mean with the two to three hundred in FTE reduction could it be that we now come in at the lower end of that that range a bit or how depending is this on how the volumes develop throughout the remainder of the year those would be my two questions thank you thank you

I think, let's say, the volume development in the quarter in relation to market share developments, what we said is that given the overcapacity in the market driven by the fundamental changes last year, we do expect full year a little bit of market share loss. And then you think about one or two percentage points and not significantly more. And that is also the trend and what we saw coming out of 2022, including the first quarter of 2023. So no deviations, no differences in comparison to the earlier statements there. If you talk about, let's say, our expectations for Q2, we're still a bit cautious, but by saying that we do expect volumes of parcels to come in relatively flat in comparison to last year, that is a bit of a continuation of the slightly better performance that we also saw in Q1 and is a little bit of an improvement in comparison to our own expectations as well. At the same time, obviously, we're still a bit cautious given the fact that we're still operating in pretty volatile markets. But that is how we look at it. Then your third question, there is no relation as far as we are concerned of the slightly better volume development and the 200 to 300 FTE reductions. We're still making progress and aim to achieve that plan and that should impact 2024 step up in performance, prominently in parcels with 25 million. So there's no deviation to that plan. We plan to complete the planning phase by the end of the second quarter and also are engaging with the Works Council to operationalize those very many different plans. So there's no correlation with slightly better volume developments and then as such coming up at the lower end. That's not the plan.

And keep in mind that the 200 to 300 full-time equivalents are indirect. so they're not directly related to volume at all.

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

Thank you. We'll now move on to our next question. Our next question comes from the line of Frank Klassen from DeGroof Petercam. Please go ahead. Your line is open.

Yes, good morning. Good morning, all. Two questions, please. First of all, on the price mix, have we seen now most of the positive price mix or can we still expect more to come in the coming quarters? Can you still raise prices maybe in the course of the year? And then secondly, on your digital transformation program, you spent 3 million in Q1. What can we expect for the rest of the year and what are your main projects here?

On the first one, yes, definitely we and you should also expect a continuation of the price mix along the lines that you've seen in the first quarter. That's obviously not because of the fact that we're still introducing new price points. Those have been introduced and have been negotiated. as of the beginning of the year. But in comparison to last year, obviously those individual price points are at a significantly higher price level. So you should expect those elements of the table to come back also in the next three quarters.

Okay, but no new price hikes foreseen, I would say?

No, no additional ones on top of the ones that we have introduced already at the beginning of the year.

Okay, and the digital transformation?

Yeah, well, this is roughly speaking also the run rate that we're currently working on. And so that will continue also for the next quarters. Big projects are, and it was already mentioned in the introduction of an algorithm also for the e-commerce route optimization part. There are changes being made to our digital channels to enable SME clients to access our service offerings better. So that's just a few examples of the projects that we're currently working on. The vast majority of those are focused on improving the customer journeys of our key customers on our key journeys and at the same time improving the efficiencies even more in our e-commerce part of the business.

Okay, thank you very much.

Thank you. We'll now move on to our next question. Our next question comes from the line of Mark Swartzenberg from ING. Please go ahead. Your line is open.

Thank you. Good morning, everybody. Congrats on the quarter. A couple of questions from my side. First of all, on the parcel volumes. Can you share maybe a bit more or provide a bit more color on how your larger segments were performing? Was there a difference between certain categories, clients? Can you provide a bit more color there, what you saw through the quarter? That is one. And the other one is on the cost basis. So you have $54 million of cost savings, including the $10 million one-off. so 44 million run rate, a guidance of 185. If I simply multiply the first quarter by four, I get to slightly below the 185. But is that 185 sufficient in terms of organic increase? Isn't there through the year also some additional inflation still feeding into maybe in Belgium, into your wage indexation, et cetera, maybe provide a bit more color? Sure. around the 185, how confident you are to reach that number. And then maybe a small one here on the free cash flow PIM. That tax settlement you had was mainly related to 2022. I see in the cash flow this minus 34 million of cash outflow, but it's a bit... bucket of where more items are included um well first of all it was included i guess in your free casual guidance but can you also share the number with us and then lastly also a bit of for the modeling uh personnel other i see in your outlook statement you provide 20 million better than 2022 due to pensions should i then assume that the post another habit is around 20 million better than lower negative than last year, or should we include more inflationary items to get to a number for personnel? Those were my questions for now. I have actually a few more, but I might come in later. Thank you.

All right. I would say there wasn't a big deviation between the different segments, larger or smaller customers, if you talk about the profile of the volume development. What you did see, though, is slightly better performance from the international part than the domestic part, which was also what we alluded to while saying that already the improvements as a fourth quarter continue down that road. So no specifics between customer segments, but international slightly ahead of the curve if you compare it to domestic performance. On the 54 organic costs, obviously, I do recognize the way you do the math, Mark. So, indeed, 44 is kind of the structural component. Do that times 4, add back to 10, and you are already almost there. And, yes, there's a few cost components that are maturing a little bit throughout the year. But we have clear visibility on those. So at this point, I don't have any indication or argument why it should be a material number different from the 185 that we indicated before. On the free cash flow component, yes, the free cash flow performance of this quarter and the moving parts that you can see in this bridge were all part of our forecast of cash flow for the entire year. I don't by heart now have the number of the tax paid in 23 that do relate to a corporate income tax assessment over 2022. So I don't know the right number for that right now. And on PostNL, the biggest component, but not the only one, is indeed obviously the Delta pensions that you can find there. And what is left is, let's say, obviously also impacted by organic cost increases for the people that are – the costs related to the people that are reported there. So – That is what I can say about that.

Okay, very clear. Maybe I can squeeze in another one. On your outlook, you had these bar charts per quarter. Well, this quarter obviously was a bit better. Q2, I recall, was also a bit similar to the chart for Q1. Would we now have to assume that that one also is a bit better because you're trending a bit better also in parcel volumes? Is that the right way to look at it?

Yeah, well, let's say if you go back to the graph of Q4, there were kind of in Q2 two different kind of elements there. One was the kind of the business performance, and the other one was obviously with Orange. point in time the expectation that the one-off cost, the restructuring cash out in relation to the cost savings were to be accounted for in Q2. There we say that we'll be faced differently. It's not one program, but different components, and as such will be accounted for in different quarters. And the real business performance is expected to come in more or less in line with last year. And, yeah, there's always going to be a little bit of phasing elements coming out of a quarter into the next, but that is what we currently see. So a business result excluding one-offs, that is in line with last year.

But the phasing of the one-offs related to the – I think they were phasing in in the second half of the year because the program still needs to start up and then you take a provision. Has that now changed then? Is that what you're saying?

In February, we did assume the total restructuring cost and one-off related to the cost saving plans to be accounted for in Q2. What we now say is that given the progress that we've made and the fact that it will not be one program but different trajectories per business unit, That will not materialize all in Q2, but will phase over the three quarters. And at this point in time, I cannot be more precise. We're completing the plans. We're engaging with works councils, so that will be for later. And the kind of normal business performance is expected to come in at the level of last year. That is the answer I now have repeated. Okay.

Very clear. Thank you very much, Pim. Thank you.

Thank you. As a reminder, to ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. We'll now move on to our next question. Our next question comes from the line of Nicholas Morder from Kepler-Tibra. Please go ahead. Your line is open.

Hi, good morning. Can we talk a bit about male segment profitability seasonality? Because even when accounting for the non-recurring COVID-19 effects, first quarter profitability in the last two years was very strong. I appreciate that this year is for different factors. But given the many things that have changed over the course of the pandemic versus where we are now, can you perhaps describe a bit in your view how the profile of the profitability is going to look like going forward? Is this a normal level that we're seeing right now? And what are your expectations here going forward? Thank you.

Thank you, Nicolas. Yeah, what is normal? So let's say the seasonality, the real seasonality pattern of the mail business is coming back to normal, having no longer those COVID elements in it, which always means that Q4 will be by far, by far the biggest contribution to the profit in the mail business. And then within this year, and the question is, what is normal? And that is obviously that in this year, we see exceptionally high organic cost increases that, let's say, are obviously impacting also the Q1, Q2, Q3 performances, relatively speaking, big, given the fact that we have not been able to offset those organic cost increases completely by price increases and cost savings together with the volume development. So you would expect margins in meal to come back to more or less pre-COVID numbers for the well, Q1, Q2 margin levels and still the fourth quarter to be significantly more valuable, then there's always going to be some deviations between the quarters that are driven by terminal due positions that get settled that do impact the quarter per quarter margins and or proceeds of real estate that are also part of the meal segment as you know so those are the elements to look at all in all the meal performance and meal margin of this quarter was in line what we expected it from meal based on the outlook and the assumptions under the outlook that we've provided at the end of February for you.

Okay, very clear.

Thank you. We'll now move on to our next question. Our next question comes from the line of Henk Slotboom from the idea. Please go ahead. Your line is open.

Good morning all. Thanks for taking my questions. I've got two. One, Pim, maybe I'm a grumpy old man and pessimistic, but I hear you talking about an improving environment. Perhaps you could shed some more color on that, because if I look at consumer confidence, it's still very negative. If I look at the latest data that have been disclosed by the Dutch Central Bureau of Statistics, the retail sales are volume-wise still in negative territory. What is driving your optimism? Because I would like to share it if I can. The second thing is with regard to fuel costs. There's been a temporary cut in the duties on diesel and fuel that will largely disappear as of the 1st of July. Do you have Last year, I believe you didn't have the fuel surcharge as part of your tariffs. Is it now included in most contracts? Those were my questions.

Thank you, Henk. Yeah, well, there's, let's say, depends on, let's say, where in the day or in the week you get, let's say, you make your cut off on the news stories. Yes, there are some positives and also next day or next week there could be some negative developments on the macroeconomic front. What we did see, however, is that consumer confidence, albeit still negative, is slightly improving. We have seen consumer spending coming up a bit. We did see inflation coming down. Obviously, last week's announcement was that it is spiking up a bit again in April. So it's not a clear-cut message. There are some drivers where we see positive signs and still some that are still indicating that we're in macroeconomically speaking very difficult circumstances. And that's also why we say, yes, it is a good start of the year, but let's see how this continues whilst we're still operating in a pretty volatile and uncertain time. So there's some good, some bad, but all in all, still very volatile markets. On the fuel side, obviously, we are aware of those relevant timelines and dates that have been taken into account in our full year outlook. Yes, there's fuel surcharges in the vast majority of our contracts that we've negotiated and have implemented as of the beginning of this year.

Can I add a third question, Tim?

Of course.

With regard to the dividends, because when I do my calculations, you will probably end up at around the two times debt ratio level. What determines the interim dividend? Normally, you pay out a third of your dividend as an interim dividend. In August, you have to make up your mind. Let's assume... Sorry?

No, you're absolutely right so far.

What determines whether or not, suppose that in August the debt ratio is, let's say, 2.2 or 2.3 times on a last 12 months moving basis. Difficult phrase. Could that be a reason to say, okay, well, we don't know whether we'll end up the year at two times or less for a dividend. We'll skip the interim dividend. Is it something you will make up your mind as the year progresses? Could you allude on that, what your view on that is? Because that will be most helpful.

Yeah, I would put it differently. As long as we believe that we'll get to the end of the year below two, and our expectation is that it will be, and also the phasing of the cash flow in this quarter was not a surprise to us. So if we need to take the decision on interim, we'll do that with the perspective going forward in mind as well. And so I have no doubt in my mind that we'll just be able to pay the interim dividend, which is indeed one third of last year's dividends. It would only be really different if by then we had a very strong opinion that we would end up by the end of the year at a leverage ratio significantly above the two, which as I said, we do not expect at all.

Okay. Well, that's very clear. Thank you very much. Thank you.

Once again, as a reminder, to ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. Our next question comes from the line of Mark Swartzenberg from ING. Please go ahead. Your line is open.

Yeah, hi. I had one more left. On mail and L and the minus 8.1% volume decline, was this stable through the quarter or were you also seeing some sort of improvement there on the back of the same arguments as the parcel trend improved? And what did you see in your direct mail or your advertisement segment? Was that weakening due to the consumer confidence coming down and And maybe companies become a bit more cautious. Maybe you can provide a bit more color there.

Yeah, of course. Yeah. No. Whilst at parcels, there was kind of a different trend line, January, February comparisons, and then March. That's not the case in mail. So that was roughly month over month following the same pattern. And also in the product mix, no big changes between direct mail or transactional mail. So basically following the expected substitution trend lines, roughly speaking, for all products for all the months of the quarter following the same trend line.

Okay.

So... And maybe because you allow me, let's say, a second chance to obviously answer a question that you said before, I think cash out on taxes related to last year is, roughly speaking, $30 to $35 million.

And that was included in your outlook as well? Yeah. Okay. And anything to add on networking capital movements for the full year? Anything?

No changes. We do expect all in all, as said on CAPEX, to stick within the same full year number, slightly phased to the beginning of this year. Working capital, no fundamental changes to the expectations. Likewise on tax, and the 16 million obviously will not repeat itself on the transitional pension payments that have been made.

Can you remind us of the kindness on the networking capital that you provided?

Yeah, of course. If we go back to the bridge... At that point in time, we expect roughly 150 million of CAPEX. And on working capital, just give me one second just to make sure. a slightly negative uh change in working capital i would say around about the uh the 20 to 30 million okay that's very clear thank you very much thank you we'll now move on to our next question

Our next question comes from the line of Paul Kirjanov from Bank of America. Please go ahead. Your line is open.

Good morning. Paul Kirjanov from the place of Muniwa. I just had one question on the state of the market. You mentioned there's still overcapacity in the market present from the last year. Can you maybe talk a little bit about the trend in overcapacity that you're seeing and maybe more generally and broadly about what you're seeing from the competition and what developments you're seeing there. Thank you.

Yeah, I think what we talked about at Q4 was obviously that if you look at the fundamental changes in market dynamics as of end of February last year before that all parties in the market the e-commerce market were organizing themselves on growth coming back out of COVID assumed to get to a relatively normal year of growth in e-commerce driven by GDP growth and online penetration growth. Now, obviously, we've seen that regular growth of a number of percentage points turned into a significant negative. And that led to overcapacity in the market, giving all capital commitments that were all made prior to obviously the Ukraine war starting. And, well, you see competition trying to fill up that capacity. We try to be disciplined and not follow those lower price points everywhere. But that then will also is one of the arguments why we do assume one or two percentage points market share loss. We do expect, however, that with one to two years of regular growth, that overcapacity will I will be absorbed by the growth expectations. Now we're a little bit ahead of that schedule, given the better performance on parcel volume that we've that we've seen in the first quarter. So that's the way to look at it. Thank you. Thank you.

Thank you.

Thank you.

We'll now move on to our next question. Our next question comes from the line of Nicholas Morder from Kepler Schifra. Please go ahead. Your line is open.

Hi. Thanks for accepting the follow-up. I would like to come back to the flat parcel volume outlook for the second quarter. Assuming that the 1-2 percentage points of market share losses will also be at that run rate in the second quarter, it's implied that the overall market is growing. Conceptually speaking, can you disentangle whether this is to consumer spending growth in real terms, which would sound odd at where we are currently, or is it due to e-commerce penetration gains starting to pick up again post-COVID? Thank you.

Yeah, I understand the question, Niklas, but for a quarter-to-quarter, I cannot make that statement. spending and online penetration. That's just not feasible to do that in a reliable way. But let's say conclusion is that we indeed do expect, like we've seen in March, the market to grow a bit. And then let's say with that slight market growth and maybe continuing the trend on market share developments, we do indeed expect roughly flatline volume developments in the e-commerce space for the second quarter.

Okay, then let's speak after the second quarter again. Sure.

Thank you. We'll now move on to our next question. Our next question comes from the line of Marco Limite from Barclays. Please go ahead, your line is open.

Hi, good morning. Just one question left for me. Clearly there was some negative news flow around Belgium last year and if you could give us just an update on how things are developing there. I think there were some course ruling going on if those have terminated and you know, the read across from some of your competitors is also that you have lost a bit of market share there. So if you have in place some commercial effort to, let's say, regain some market share in Belgium. Thank you.

The status of... The court cases in Belgium is that they are postponed again and we're waiting for the next date. So we don't know yet. So to be honest, we're still in the procedure and there's no court case has been done and we're waiting for the next date to have a court case. So no news in that sense. When it comes to commercially in Belgium, of course, the biggest part of our volume in Belgium is import. And there we see, of course, opportunities, but those opportunities lay in the Dutch market because most of the volume comes from the Netherlands to Belgium.

Okay, thank you.

thank you we have time for one more question our final question comes from the line of stefano tofano from abn amro auto please go ahead your line is open yes good morning so um one question left for me um

It has to do with the performance expected in 2024 or the margin improvements. You guide for at least 200 dips margin improvement at PostNL, mainly focused on the parcels. And I'm just wondering about the difference in margin improvements on the EBIT versus the EBITDA level, given what we have seen in increases in investment, which should be reflected in increases in the DNA. So, again, more on accounting questions, but what kind of different dynamics should we see on the EBITDA and the EBIT margin levels? based on your guidance of 200 dips margin improvement.

I think on the EBIT margin what we said is a step up of not less than 200 basis points of which roughly speaking 300 in the parcel segments and 100 basis points on the mail side and then by the relative shares you get to 200 basis points. We do have a step up in the depreciation and amortization lines from 22 to 23 that's also why EBITDA will develop a little bit stronger than EBIT will develop and they are what you should as an assumption take is that additional DNA is all in the segment of e-commerce. So the DNA in the meal side of things is more or less stable year over year.

Okay, thank you.

Thank you. There are no further questions at this time, so I'll hand the call back to Jochem for closing remarks.

Thank you, operator, and thank you all for participating. The last thing to point out is that we are planning to have a deep dive on our cross-border activities at the end of June. Stay tuned for more information about that. We will host a live event and also make it available through a webcast. Thanks very much again, and see you later.