Postnl Nv

Good morning, ladies and gentlemen. Welcome to the post-NL half-year 2023 analyst call. At this moment, all participants are in listen-only mode, and after the presentation, there will be an opportunity to ask questions. Now, I would like to hand over the conference call to Mr. Johan van der Lassoe, Director of Communications and Investor Relations, post-NL. Please go ahead, sir.

Thank you, operator, and good morning, everyone. Thank you for joining us today. We know some of you are enjoying their well-deserved holidays, so we appreciate the effort to be with us this morning. With me here in the room, Herna Verhagen, our CEO, Pim Berendsen, our CFO, As usual, we will start with our slides, which you can find on the website and on your screen if you are logged into our webcast. And the presentation will be followed by Q&A as usual. Herna, over to you.

Thanks, Jochem. And let's start with the key takeaways. We had a satisfying second quarter and, of course, also second quarter results, especially because of the better than expected volume development at parcels, which came in at 3.3%. That is growth in our domestic business, but predominantly with our international customers. We took lots of measures to mitigate of course the inflation which are supported with good operational leverage and efficiency improvements that helped of course the normalized EBIT development in this quarter as well. The reported volumes within Milan, the Netherlands, were minus 9%, which is mainly substitution, not very different from what it was the last quarters and also the last years. We improved our carbon efficiency 10% if you compare to full year 2022, and we made good progress in our reduction plan of the 200 to 300 full-time equivalents. Good progress means... that more of the people who need to leave did find a job within PostNL elsewhere or left the organization. And that, of course, led to the fact that we need less restructuring costs. Previously, we mentioned 20 million. This year, we expect it to be around 10 million, of which 5 million is in the second quarter. And a small part of the cost savings is expected to be achieved as early as in 2023. The interim dividend is set at six cents per share. Because of a good first quarter and a good second quarter, we also raise our outlook. For normalized EBIT, it's between 100 to 130 million euros, and before it was 70 to 100. Free cash flow remained unchanged between 10 to 40 million. We're happy, of course, that we took measures at an early stage to deal with the changing macro environment. This, along with the dedicated efforts of lots of our employees, is reflected in this quarter's performance. If you look into a little bit more detail or the numbers of the second quarter, you find that our normalized EBIT came in at 18 million, which is better than expected, but also above the second quarter of 2022, which was 10 million. We saw a revenue growth and, of course, also growth in normalized EBIT. Free cash flow also a little bit better than expected. had in the second quarter of 2022. And the normalized comprehensive income a little bit less than we had in the second quarter of 2022. In my view, important, of course, and Pim will come to that as well, the normalized EBIT includes our organic cost increases in the second quarter so far. 38 billion in the second quarter, but for the full half year, 92 million. And our full year assumption is 185. And we had a positive impact from pensions in the second quarter, which is visible in PostNL other. A better than expected quarter above last year. And of course, underpinning the race in our outlook. We remain, of course, to focus on our strategy, which is being the leading logistics and postal service provider into and from the Benelux. For parcels, it remains to be managed our business for sustainable growth, which we do, for example, with many of our efficiency programs. For mail, it is manage for value. And I will dive into our mail business at this moment in time. Manage for value means, on the one hand, cost savings, on the other hand, price increases, and manage, of course, the volume decline. And keeping to be very supportive to our Digital Next program, in which we try to digitize our business end-to-end, and that supports business performance and increases customer satisfaction. Strategic objectives are of course helping our customers growing their business, securing a sustainable meal market, but also, for example, increasing our net promoter scores to maintain to be the best in the market. In social value, which is an important strategic objective, we made progress when it comes to attracting employees within parcels and parcel drivers. And of course, we have full attention for solving the amount of vacancies we still have within our mail business. An environment already discussed. We're taking lots of initiatives to improve year over year our environmental footprint and environmental impact. And part of our initiatives are of course in electrification and using HVO, which is biodiesel for our trucks, which has a 90% less CO2 emission. If you talk about delivering on our strategy, which is on slide number five, You find, of course, here a few of the items I already mentioned. A few others, I think, which are important to mention. If we think about parcels, we saw a strong potential. We see a strong potential for e-commerce growth, which is unchanged and which is based on the fundamental growth drivers, which are, of course, the digital platforms. The amount of consumers that use digital to order their things and the economic situation. What we do see is that the fundamental growth drivers are still in place. That's the reason why we do think that parcels will continue to grow and fortunately growth came in earlier than we expected. we secure our position in a very dynamic and competitive market and that's what we do by on the one hand making sure that we score high on our net promoter scores and are by far the best in the market when it comes to nps and on the other hand also make sure that at the back we do have a cost efficient operation and organization to be able to create efficiencies Within mail in the Netherlands, we have an unchanged drive to get our cost savings right and to fill in our moderate pricing policies. What we do see in the second quarter, we see an unfavorable shift in mix, so less 24 hours mail with a higher margin and more 48-hour mail. We see significant cost increases, which we're not able to fully appreciate. via cost decreases and price increases. And we see that achieving our cost savings becomes more challenging, which partly has to do with the fact that we're already shrinking our organization for the last 10 years and partly have to do with the fact that we have quite some cost-saving programs running at this moment in time, also affecting the delivery quality. In digital next, we keep having a good performance, like, for example, in the amount of accounts. 8.4 million consumer accounts at this moment in time, and it's constantly growing. We see it in the growth of the amount of parcel lockers, but also, for example, AI, which we use for recruiting our people. On ASI, I already mentioned that we had a 10% further carbon efficiency compared to the full year of 2022. And I already mentioned that the ways we do that is via electrification and also by driving our trucks on biodiesel, which is much more CO2 efficient. We talk a little bit through the business of parcels and mail and then I'll step into slide number six and I'll start with parcels. Here we see that a return of growth came earlier than expected together with of course the measures we took to mitigate inflation and they are successfully paying off in a good normalized EBIT also better of course compared with the second quarter of 2022 And as already said, the biggest part of this volume is international volume. The smaller part is domestic volume. But I think the good news in this is that also the domestic volume is growing again. Market share is slightly down in the market, which is still characterized by temporary overcapacity. The revenue reflects our volume growth. And overall, of course, price makes effect. Positive pricing, which of course put in place partly because of all the inflations we saw, partly we did see room, of course, to improve our prices. And partly it's a less favorable mix, which is mainly because the growth of international customers. Not only the international customers from spring, but the whole of CBS is showing good progress and shows a positive trend. And that's what we see already from Q4 2022. Within logistics, we saw that revenue came down slightly. Organic costs are higher than expected, which is mostly, of course, labor. And that is due to inflationary pressures. But we took lots of adaptive measures. And you could think in that sense of optimizing our routes, creating higher utilization rates, tight control of our indirect costs, also all resulting in improving our operational leverage and therefore also efficiency. A few more words on mail in the Netherlands. Mail in the Netherlands shows continued volume decline. We expect to enter the year within the bandwidth of 8 to 10%. Volume decline in the second quarter is 9%. And if you take out COVID, then it's 8.4%. Revenue came down because of that volume decline to 323 million in the second quarter. It came from 350 million. And also our normalized EBIT came down from 13 million last year second quarter to 2 million this year. There we see, of course, increased labor costs, which follows the CLA of PostNL, but also the CLAs which we have for postal deliveries and Saturday workers. We see a continued higher sick leave in this tight labor market, partly because of the fact that we have vacancies and people are asked to do more work. And we see additional cost savings are of course achieved through our programs, but we also did see, and that's what I already mentioned, that the amount of programs together makes it sometimes more difficult to reach the level of cost savings we expect. More challenging in the sense we have an unfavorable mix effect, which comes from a shift to lower service proposition and less single items versus bulk mill. But also the proportion of international mill plays a role over here, together with, of course, a cost increase because of inflation, but also because of the fact that we have higher sick leave. and have more difficulty to get to the level of cost saving we want to get to. As already said on my first slide, and then I'll move to slide number eight. All in all, we're very pleased to announce a second consecutive quarter with results above expectations. We've implemented adaptive measures to mitigate the inflationary pressure and are successfully paying off. These are successfully paying off. Volumes at parcels returned to growth earlier than expected, which is positive domestically as well as internationally. And at the end, and at the same time, developments in mail are becoming more challenging, which as we expected, which means that we have a performance below last year. We have made steady progress in our plans to reduce 200 to 300 full-time equivalents, which part of the expected annual savings will be achieved in 2023, but also leads to significantly lower restructuring and related costs because of the fact that people find external jobs and therefore leave the company themselves. And as a result of all these developments, taking into account, of course, the growth within parcels, the fact that they have a better normalized EBIT, the challenges we see within mail in the Netherlands, and we are positive about the normalized EBIT of PostNL and raised the outlook to 100 to 130 million euros. We continue to deliver on our strategy, which is crucial for us. And it's probably a sentence which we've used over the last 12 quarters, but we maintain to use it that the environment we operate in remains to be volatile and therefore uncertain. Much more to tell about the development of PostNL and the financial performance, and therefore I hand over to Pim.