Postnl Nv

Good morning, ladies and gentlemen. Welcome to the PostNL Q2 2024 results call. At this moment, all participants are in a 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 Miss Inge Laude, Manager, Investor Relations. Please go ahead, madam.

Thank you, operator, and thank you all for joining today in our analyst call. We have published our Q2 and a half year results early this morning, and with me in the room are Herna Verhagen, our CEO, and Pim Berenser, our CFO, to present these results to you. Herna, would you please start?

Thank you, Inge. And of course, I'll start with slide number four, which is on the highlights of the second quarter. In our view, a good quarter as expected. Parcel volumes up with 6%, modestly domestic, but high growth when it comes to international customers. And, of course, on most of these topics, we'll come back in the further slides. Meal volumes were down 1.3%. That's because of the elections in Europe. It's 5.9%, almost 6% when you adjust for that. We saw a continued rise of our organic cost, 38 million in the second quarter, still expected to be around 155 for the full year. We had good cash flow, strong improvement compared to last year. Of course, a further improvement of our carbon efficiency, a successful issuance of a sustainability-linked node, And Pim, of course, will highlight that in his part of the presentation. And we're very happy with the outcome of the court case in Belgium, where we are played fully free from all the things they said we did do wrong. And most importantly, also the management in Belgium is totally free from that and there is no appeal. And of course, we'll pay a dividend, which is three euro cents. For meal in the Netherlands, we once again, of course, highlighted the urgent need for transformation. That's a transformation in the postal law where we want to change universal service obligation to get meal within two days and overtime within three days. And what we added today to that is that in the bridging measures, which were already by the Minister, of course, communicated to Parliament, that together with those bridging measures, we would like to have a financial substitution or a financial contribution as well that should be, in our view, included. In parcels, the growth we saw in the second quarter is trending to our full year anticipated level and happy with a slightly higher market share in the quarter. What we do see, of course, is that the product and customer mix is less favorable and that impacts margin. Still with full confidence for further growth of our e-commerce going forward. That translates into the results you find on slide number five. What you see over there is that the normalized EBIT for the second quarter is the same as last year, while revenue grows slowly with 3% and, of course, as said, a much better free cash flow. I think important to highlight here, and not yet said in the other highlights, is the fact that the mail volume development is strongly positively impacted by the election-related mail, and we did see a further shift to non-24-hour mail, which impacts margins. Organic cost increases... continued 38 million in the second quarter and largely mitigated by yield measures. And we'll come back to the measures we've taken and still also the measures we see going forward till the end of the year on a later slide when we talk about strategic drivers and development within parcels. I think this is the moment for me to go to that strategy, which is on slide seven, and of course earlier laid out and also explained to you. Our strategy, of course, is still the same. We have a strong strategic foundation in which we say parcels are managed for sustainable growth. In meal, we manage for value and we want to accelerate our digitization. That's next to the fact that we have a few important strategic objectives, which are around our customers and consumers. And for example, is on our net promoter score. which is on environment, where we want to improve our carbon efficiency, and which is on social value, where we want to be a good employer, able to pay the wages as expected in the market we operate in, and again, very happy with the outcome of the court case in Belgium. 225 years does this company exist, and hopefully it will be there for the next 225 years. Let's dive a little bit into the measures taken within parcels and mail in the Netherlands, which create that sustainable growth and which create that managed for value. First of all, start with parcels, and that's what you find on slide 8. This is a combination of what are the important strategic drivers and actions set into motion in the beginning of the year together with some of the results at the end of the second quarter. The first important element in managing for sustainable growth is, of course, balancing volume and value. We've taken quite some actions when it comes to our revenue management, meaning that we have tailored pricing policies to balance our portfolio and also attract the favorable parcels, together with the fact that we have very active capacity management, which is necessary, of course, talking about the volumes coming in. We have a targeted approach in the direction of the small and medium accounts. And especially in this segment, we're scaling our digital initiatives and they're working quite well and are highly appreciated by those customers. And we find new customers in that SME segment, which is important for us as well. Simplifying products and services is what we do in 2024, but especially also in the direction of 2025 needs to bring in further rationalization. When you talk about managing capacity versus volume, you also talk about network rationalization and cost control. These are important actions to underpin also the 35 million of cost savings we took into account and still is, of course, in our latest estimate and outlook. To reach that cost reduction, we're, for example, working on a more efficient first and middle mile while we integrated certain networks. We do smart route design by algorithms. And at this moment in time, more than 60% of the routes are automatically planned. But we also focus on our parcel lockers and more broader than that on our out-of-home strategy. We placed more than 1,000 parcel lockers by the midst of this year, and we want to grow to around 1,200 by the end of the year. And that is, of course, next to or together with all the retail stores we currently have. Focus on consumers and customer space out. When you look into our net promoter score, we have a very strong number one position in the market. We slightly gained market share in the second quarter, also important. And what we do see is that we have a growing amount of consumers making use of our parcel lockers. That then translates into second quarter numbers, which you find on slide number nine. here you see that revenue increased normalized ebit slightly declined and we saw a volume growth of six percent and that is on trend for our full year outlook which is on seven to ten percent the six percent consists out of a growth of almost 30 percent from our international customers and 0.3% for our domestic customers. And important to say with that is that that growth then also mainly comes from the larger customers. We did see that the weather conditions in the Netherlands impacted the e-commerce market and especially in fashion. When it comes to the customer mix, it impacts our tariffs and it impacts, of course, our average price per parcel, and Pim will come back to that in his presentation to show you a bit of the effect it has on our business. As said, significant cost increases also within parcels, not only mail, also parcels, and many efficiency improvements to balance that, and I already discussed most of these efficiency improvements on the slide I just presented. So that's a good moment to go to slide 10, where we talk about meal in the Netherlands. In meal in the Netherlands, we manage for value. And as we did say when we presented our Q4 numbers in February, there is an urgent need for transformation. And why is that? First of all, of course, the ongoing decline of meal. Also this year, expected to be between 7% to 9%. Together with the fact that we see a shift from 24-hour to non-24-hour mail. So already in our volumes, we do see that there is less need for urgent mail. Together with the organic cost increases, which continue to rise, they have a big impact, especially in an organization where, of course, which is mainly people-dominated, and that is where the meal business in the Netherlands is. The result over the first half year was 1 million, and I think that underpins the urgent need for transformation. In our view, when we talk about transformation, there are two important elements. The first one is, of course, what we said in February, and that is the postal law needs to change. And in our view, the best way forward to change the USO into what you posted today will deliver within two days and overtime within three days. That's, in our view, the best way forward, together with, as already said by the Minister, that bridging measures deemed necessary. And in our view, a financial contribution in those bridging measures is crucially important to maintain the mail services as they are today. That, of course, asks for political process. That's what you see on slide 11. So far, we had, of course, the letter from the minister, which went to parliament in May. There was a roundtable that took place in June. In that roundtable, many members of parliament were informed by all sort of market parties about their views on the mail market. We expect a first debate in parliament in October. Before that debate there will be a letter from the minister in which we expect that there will be an exploration around the bridging measures and in the meantime ACM needs to assess the requirements of postal service users. Also important is, of course, the real amendment of the Postal Act. Hopefully that will also be discussed in October. And also here ICM is asked to assess the feasibility of that and to give a view on post in the future or meal in the future. And that part needs to be ready somewhere in spring 2025. In 2025, in our view, it will be a year of discussions in Parliament. Hopefully, the first bridging measures will be in place in the year 2025 when it comes to the amendments to the Postal Act. We do not expect that these will be in place in 2025. We expect that there will be a discussion on these elements in Parliament starting in 2024 but also walking into 2025 to hopefully come to a finalization. If you then look to the numbers of mail in the Netherlands which are on slide 12, you see that the second quarter had a relatively good normalized EBIT, also a relatively good volume decline, but as said, caused by the fact that we had the European elections and therefore had lots of mail underlying, we see that substitution is ongoing. We increase the revenue price to mitigate, of course, the cost increases we see in our mail businesses as well. And that's what we did on January 2024, but again on July 1, 2024. And as already said, in revenue, you find also the unfavorable shift in mix. We see more customers moving from 24-hour mail to non-24-hour mail. The costs are continuing to be high, which is partly because of labour costs and organic cost increases, which is partly because of higher sick leave and in a tight labour market, which results also in higher related costs, including a higher provision. And to offset that as much as possible, as said, stamp prices are increased and we continue to save as much cost as possible. Cost savings over the first half year were 20 million and we expect to be around 40 million by the end of the year. The graph also shows an indication of the split in bulk mail. the non-24-hour and 24-hour meal, and you see here the slight decline from 24-hour to non-24-hour. If we look into the development of our businesses, we reconfirmed the outlook, and that's what you find on slide 13. Imparsers were well positioned for the anticipated pickup in volume growth towards the end of the year, and Q1 and Q2 gave us the trends we expected to see to be indeed around the 7% to 10% by the end of the year. with consistent focus on customer excellence and strict cost control and capacity management to make sure that we reach the margin level we want to reach within parcels. For Miele in the Netherlands, focused on, of course, further cost savings and decrease the sickness rates together with, of course, an important half year in politics with the first discussions we will have on the changes in postal law and hopefully the bridging measures, further underpinning the urgent need for transformation. I hand over to Pim to go through the numbers and also a little bit of the insights behind those numbers. And I hand over.