Postnl Nv

Good morning, ladies and gentlemen. Welcome to the PostNL Q2 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 the conference over to Miss Inga Laude, Manager, Investor Relations. Please go ahead, madam.

Thank you, operator. So welcome all in today's analyst call. PostNL published its Q2 and Health Year results 25 early this morning. And with me in the room are Pim Beerense, our CEO, and Linda Janssen, our CFO, to present these results to you. Pim, the floor is yours.

Thank you, Inge, and welcome everyone to the call. Let's start with an overview of the key developments in the quarter. And then further on in the presentation, you'll get more insights on the key financial KPIs that will follow later. First, the main business drivers per segment. At parcels, revenue was up 2.8%, with volume growth of 2.2, and different growth rates in domestic and international volume, and we see the trend of further client concentration continuing. From a price mix perspective, it is really encouraging to see that we have again a positive price mix, driven by regular price increases and our yield measures. Our targeted yield measures are coming into effect and evidence our strong focus on customer value. And as anticipated, we see a slight loss in market share. The pre-summer peak was a busy period and we have been able to manage this very well. When looking at our cross-border business at spring, revenue from intra-European activities, obviously one of the strategic initiatives that we launched for 2025 and beyond, show promising growth. For mail in the Netherlands, as you can see on the slide, volumes declined by 8.3%. Linda will explain this later on. I would like to focus on the progress towards a future-proof postal service in the Netherlands. At the end of June, the minister made some announcements on this topic. First of all, we appreciate the minister's comment to the public importance of the postal service and the speed with which he has put forward a proposal for change. But at the same time, we had to conclude that these steps show insufficient progress. Let me explain why. The government has rejected our application for financial contribution for 2025 and 2026. According to European legislation, a provider of a public service is entitled to compensation if the obligations impose a disproportionate financial burden. Given the major impact on PostNL's financial position, we will appeal the rejection and file for preliminary proceedings today, in which we will ask an advance payment and shift a swift legal decision. Secondly, the Minister has released his view on the future of the postal market in the Netherlands. Although both the recent ACM study on the postal market and his letter confirm the urgent need for change, the proposed adjustments are too little, too late and are still surrounded by a lot of uncertainty. Surely also we have to take into account the elections that are upcoming in the Netherlands. The proposal that is on the table would cause the USO to remain loss-making until at least 2029. So that's why we have to conclude that insufficient progress towards adjusted postal regulation has been made. The delay and uncertain timings around the adjusted regulation also have resulted in a significant goodwill impairment of 40 million at Mail in the Netherlands and have also led to the decision not to distribute an interim dividend. So bottom line, we are still obliged to maintain an unsustainable network that no longer fits today's demands. We do not rule out further action if nor compensation nor advance payment will materialize. Obviously, in the meantime, we'll continue to make every effort we can to maintain a reliable service and remain committed to an accessible and financially viable postal service for everyone in the Netherlands. If we then move to our key metrics on the next slide, let's start with the key KPIs. Revenue in the quarter, 807 million, which is 1.5% higher than in the same quarter last year. Normalized EBIT came in at 11 million, supported by some incidental effects at mil in the Netherlands that will be discussed later. Free cash flow was minus 47. That does include some phasing elements. And normalized comprehensive income that includes, for example, tax effects, was 5 million. We will discuss the results in more detail as we move on to the performance of parcels and mail in the Netherlands. Then to the non-financial highlights and some ESG highlights for the quarter. The share of emission-free last mile delivery improved by six percentage points to 33%. And to facilitate growth in Belgium, we have recently opened a new sorting and distribution location in Hoogleden. in a building that is completely climate neutral. Looking at NPS, we have kept our number one position in relevant markets. And reduction in physical workload is one of our key strategic initiatives. We invested in equipment and partial automation of processes and all 13 roll cage tilters have now been installed according to the plan and are fully operational. The out-of-home strategy is gaining momentum and the utilization rate defined as the total amount of parcels during the week as a function of the locker capacity is increasing and is now at 48%. Furthermore, we've announced an intensified agreement with the Dutch supermarket chain Hoogvliet for over 70 lockers at their convenient locations. Now let's look at mail in the Netherlands in a bit more detail and specifically look back at the recent developments towards a future proof postal service. And obviously, I've already concluded that progress is insufficient for us. So on slide seven, you can see where we are. The proposal of the minister is a step in the right direction, but it's too little, too late and still economically unviable. Let me summarize the main elements of the proposal. The extension of the service framework to Dplus2 for USO can come into operation only as of the 1st of July of 2026, with the next step towards Dplus3 potentially to be made at January 1st, 2028. This step is however conditionally. and would require PostNL to show a delivery quality of 90% for D plus 2 as per January 1st, 2027 and at a volume decline of on average 7% annually from base year 2024. So there's two conditions to make the step from D plus 2 to D plus 3. Obviously, this also means a delay compared to the roadmap that we have presented earlier and also still shown to you in February. Moreover, the proposal contains a quality condition of 95%, which is simply not feasible in practice. And more importantly even, the proposal does not include any arrangements for the financing, nor a financial safety net, nor clarity about financial contributions. It's furthermore still a proposal with a lot of uncertainty around timing, as the political process is far from being where it should be. Decisions have to be taken, but first lower legislation has to be designed and drafted. Early September there will be follow-up meetings, a roundtable and then a debate, but lower legislation is not yet at the table at that point in time. So persisting uncertainty and that in a period with upcoming elections. On top of that, our application for financial contribution was rejected. And to remind you, we asked for a compensation of 30 million in 2025 and 38 million in 2026, based on net cost compensation, as PostNL is being asked to maintain a network that no longer fits today's demands. According to European legislation, a provider of this public service is entitled to compensation if the obligations impose a disproportionate financial burden, which is clearly the case at PostNL. So all in all, we will take firm next steps and we have a clear action plan in mind, as financial compensation remains necessary during the period of transition with amounts dependent on timing and scope of further decision making. Today, we have launched an appeal against the rejection of the financial contribution and also have asked for preliminary proceedings. We will take further steps should essential improvements fail to materialize on short notice. And in the meantime, we will continue operational preparations towards a financially viable and future proof postal service. Slide 8 shows indicative the development of normalized EBIT in different scenarios, and it also shows where EBIT should be to cover the cost of capital of meal. The blue lines are based on our projections of early 2025, and without interventions, clearly the loss will become larger by the year. With our February roadmap, as explained during our full year results publication, under the main assumption at that point in time that D plus 2 for USO would kick in January 1st, we expected to be able to limit the anticipated loss in the next coming years, and then turn back to positive results after the change to D plus three. We have now added the orange line that indicates the development of normalized EBIT based on the proposal of the minister as released end of June. And you can clearly see that it will remain loss making even up to and including 2029. So for us, it's quite clear that an urgent need for reform and swift legal decisions are required. Surely we're committed to a future-proof postal service, but it needs to be one that is financially viable for PostNL. On that note, I hand over to Linda to dive with you into the quarterly results and the financial position we find ourselves in.