Postnl Nv

Good morning, ladies and gentlemen. Welcome to the PostNL Q1 2025 results. 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 Inga Laude, Manager, Investor Relations. Please go ahead, madam.

Thank you, operator, and a warm welcome to all of you in the call and here with us in The Hague. We have published our Q125 results earlier this morning and will explain the set of results to you in this analyst call. With me in the room are Pim Berendsen, our CEO, and Linde Jansen, our CFO. Linde will present the results to you. Afterwards, Tim and Linda will answer all your questions. Linda, over to you. Go ahead. Thank you, Inge, and good morning and welcome to you all. Nice to be here for the first time and happy to talk you through the first quarter results. Let's start with the key takeaways of our Q1 results. Our Q1 results developed as anticipated and landed below last year results. Our outlook for 2025 is unchanged. On the recent developments of the global trade and tariffs, it is too early to have a clear view on potential consequences. But I will come back to that later in the presentation. The main drivers for the Q1 performance were as follows. Revenue at parcels were up by 3.5%, with a volume growth of 2%. international customers. On the middle side, volumes declined by almost 7%, mainly due to ongoing substitution. Also in 2025, we expect to see a significant organic cost increase, 31 million in quarter one, which was mainly labor related in which on a positive note, which on a positive note has been fully offset by price increases. If we look on the right side at the segments from a more strategic point of view, then for parcels I want to emphasize that we are fully focused on the initiatives which we announced in February. The implementation is progressing according to plan, and the first positive signs from our targeted yield measures are visible. On the male side, we see a further significant step down in results, mainly explained by the ongoing volume decline. We have successfully started the transition of business mail towards standard delivery within two days. As you know, current postal regulations prevent us from further adjusting our business model. As long as adjustments to the universal service obligation are pending, measures such as stamp price increases are inevitable. Now that we expect that the outcome of the ACM study will be ready later in May, we are encouraging government to take next steps in a parliamentary debate later before the summer. Let's move on to our key metrics. Let's start with the financial KPIs. Revenue in the quarter amounted to 782 million, which is 2% higher than in the quarter last year. And we see normalized EBIT at minus 15 million, which, as I said, is in line with our expectation and mainly driven by the male segment, which I will elaborate in more detail later on. Free cash flow amounted to minus 33 million, and also that I will explain later on. And then a normalized comprehensive income of minus 10. We discuss the results in more detail as we move on to the performance of parcels and meal in the Netherlands in a bit. And also the non-financial highlights and some other ESG highlights for this first quarter. We are proud to mention that we received the Platinum Award from EcoVadis. We achieved a solid, often excellent score across all criteria. And what's particularly remarkable is that we scored 100 out of 100 points in the environmental category, a fantastic achievement for our company. Besides this, we also took our first roll cage filters in use this quarter, supporting our people in their daily physical heavy activities in the depots. In the next few months, more filters will be installed. We also saw an increase again in the amount of PostNL accounts. This is of strategic importance as these accounts provide us the possibility to reach consumers and obtain information from them. For example, when it comes to delivery preferences. The out-of-home strategy is gaining momentum as evidenced by a steady increase of customers adding out-of-home options in their checkout and more consumers adding APL delivery as preferred option in the PostNL app. Let's move on to the segments for a more detailed explanation of the developments. And I kindly remind you that as of the 1st of January this year, our real estate activities are reported in the segment parcels. The 2024 numbers have been restated to provide a like-for-like comparison. Let's start with parcels. Revenue for parcels amounted to 581 million, which is 20 million or 3.5% above last year, following volume growth, price increases and mixed effects. Good to know that market share remained more or less stable. Overall, our volume grew by 2%. Volumes from international customers continued its strong growth and were up 90% compared to last year. On the domestic side, the volumes were down by 2.4%. In addition, volumes this quarter were impacted by a different distribution of working day in the first week of the year and the timing of festive days compared to last year. The volume developments impact the composition of our portfolio, resulting in further client concentration, with increasing share of volumes from large players, domestic as well as international, but also platforms and marketplaces. With that in mind, it's encouraging to see that the total price mix impact was positive this quarter. The average price per parcel was up by 3 cents, supported by targeted yield measures and regular price increases. Furthermore, it is positive to note that our cross-border activities continue to trend. We have been seeing for several quarters now, with revenues at spring being up this quarter main most strongly in our intra-european activities a promising development as international growth is one of our strategic initiatives the cost reflected significant organic cost increases on the one hand mainly related to labor however we also see the impact from efficiency improvements from network optimization and rationalization of services For example, we stopped with parcel delivery on Sunday, and furthermore, our out-of-home delivery contributed to the savings. Let's zoom further in on parcels with the normalized EBIT bridge. Here you see the reconciliation of the EBIT from 5 million last year to 3 million this quarter. The volume growth strongly contributed to our results. though was fully offset by the less favorable product-customers mix referred to earlier. The organic cost increase amounted to 15 million, following wage increases according to PostNL and the sector collective labor agreements and indexation for delivery partners. As you can see in the bridge, the impact from our price increases was also 15 million. increases and pricing. The other costs were 9 million better, mainly as a result of operational efficiency measures and the implementation of the strategic initiatives as announced earlier this year. The other results are down due to various smaller items. Then the segment mail in the Netherlands. The revenue for mill amounted to €309 million, a significant decline compared to €318 million last year, but in line with our expectations. The volume decline of close to 7%, 6.9% to be precise. This quarter was mainly related to substitution, a structural trend which we are seeing for a while now. we also noted a further shift to non-24-hour mail. Furthermore, our revenue was supported by two stamp price increases, one in July 2024 and in January 2025. Looking at cost, labor costs were up following the CLH for PostNL, and mail deliveries and sick leave rates remained high in this tight labor market. These cost increases were mitigated by cost savings of 7 million from further adjustments in our current business model, such as the transition of business mail towards a standard service framework of delivery within two days. Altogether, this resulted in a normalized EBIT of minus 18 million euros. a significant step down of 10 million versus last year's quarter, proving that the current business model for mail is not sustainable. Then let's zoom a bit further towards mail with the normalized EBIT bridge. The elements of mail I just discussed are reflected here. The bridge shows the step down of 10 million euros from the reported 7% volume decline. And you see a negative mixed effect of 3 million, mainly driven by the further shift to 24-hour meal, which I mentioned before. The stamp prices I referred to added to 30 million of revenue, and the organic cost increases of 8 million were due to wage increases and other inflationary pressures. You then also see here reflected the cost savings of 7 million which were fully offset by additional labor costs related to sick leave and lower bilateral results. Then moving on to cash flow. The free cash flow for the quarter was minus 33 million compared to minus 7 million in the same quarter last year and in line with our expectations. The difference is mainly explained, of course, by the lower normalized EBIT results, but also by the negative working capital developments coming from expected phasing effects within the fourth quarter of last year. This brings us to the next slide, where you can find the balance sheet and the development of our adjusted net debt position. Our adjusted net debt position in quarter one was €509 million, which is an increase of €35 million compared to year-end 24, being mainly explained by the negative free cash flow and the addition in the WGA provision. We continue to manage our cash flow, balance sheet and net position carefully, following our aim to be properly financed. Then over to the split of normalized EBIT over the quarters. As mentioned during our full year results in February, in 2025 normalized EBIT has to be earned in Q4 even more than in 2024. The impact of pricing will be larger in Q4 than in the other quarters. And when looking at the results of Q1 2025, the results came in as expected, as I just mentioned. Overall, the working day distribution over the quarters in 2025 is slightly different than in 2024, which also impacts the quarterly split. For the remainder of the year, for parcels you should take into account that the announced yield measures are expected to come into effect as of the second quarter. And for mail in the Netherlands, please remember that in 2024 we had election in the second quarter. For this year, no elections are scheduled. In this quarterly split of EBIT, the impact from the structural cost savings for both parcels and mail in the Netherlands is included. In the graph on the right side of the slide, you can see the indicative phasing for the savings. Obviously, the phasing is related to timing of some of the underlying measures. For example, in the course of Q1, we adjusted the process of collecting This kind of changes in processes need some time to fully settle. And some of the savings are a bit tied to the absolute volumes, of course also impacting the distribution over the year. Then over to the outlook. Of course, we have to acknowledge that the recent developments around global tariffs resulted in more uncertainty and volatility. It is too early to have a clear view of the consequences for the e-commerce market, such as a potential rerouting of Asian volumes from the US to Europe or a slowdown in GDP growth. We keep monitoring recent developments closely and are prepared to swiftly adjust plans if necessary. And as said before, the pace of client concentration due to change in consumer behavior is difficult to predict. That being said, our outlook for 2025 is unchanged. We expect normalized EBIT to be in line with 2024 performance. Free cash flow is expected to be negative as, for example, CAPEX will be above the level of 2024, including around 50 million cash outflows related to the strategic initiative announced at the beginning of the year. On the right side, on the dividend element, I want to emphasize our intention to pay a dividend over 2025. We hold on to our aim to be properly financed, taking into account the anticipated improvement in performance going forward and the progress towards a future proof postal service. And lastly, good to add that the normalized comprehensive income, which is of course the basis for the amount of dividends to be paid, is expected to follow a pattern that is more or less in line with 2023. And lastly, before we close our presentation and open up for questions, as announced in February, we will host a capital markets update in September. We will then elaborate on how we see the e-commerce market going forward based on market dynamics that we have seen and will continue to see. And we will provide you further details on the strategic adjustments. Also, we will give an update on the future-proof postal service at that point in time. Based on all of that, we will provide the market with a medium-term financial guidance for PostNL. Together with Pim, I'm looking forward to meet you all then and have the discussion with you at that point in time. For now, I would like to conclude the presentation and hand back to you, Inge. Thank you, Linda, for your presentation. We now open up for Q&A. Let's start with the analysts here in the room, and after that, we will switch to the people online. So, who will take the first mark? Yeah, sure.

Yeah, just discussing the comprehensive income to follow the path I've seen in 2023. What does it exactly mean? Because I don't have the numbers in front of me. Does it mean that we have the same development through the year or so in 2023 or the same number as in 2023 or? or does it really? Not the same number, the same pattern if you look at the development from the deltas from normalised EBIT to normalised comprehensive income as the pattern of 2023. And in Q4DEC there was an appendix slide that kind of indicated that. So the balance between reversals tax positions follows more the flow of 2023 and not the specific developments in 2024.