Postnl Nv

Welcome to the PostNL Trading Update Q1 2026 Results Call. At this moment, all participants are in the listen-only mode, and after the presentation, there'll be an opportunity to ask questions. Now, I would like to hand over the conference call to Ms. Inga Laude, Manager, Investor Relations. Please go ahead, Madam.

Thank you, Operator, and welcome to you all. We have published our Q1-26 trading update this morning. It is the first time that we reach out to you in this format, and we will explain the highlights of Q1 in this analyst call. With me in the room is Linda Janssen, our CFO. She will guide you through a short presentation and will then take your questions. Please go ahead, Linda. Thank you, Inge. Well, let's start this first trading update by giving you a short and factual overview on the first quarter. I will then give more color on relevant developments in a minute. Revenue came in at 781 million, which is about flat compared to previous quarter last year. Although we will not quantify normalized EBIT and free cash flows in the quarters that we provide a trading update, I can mention that these metrics developed in line with expectations and followed the usual seasonal pattern. With that, we confirm the outlook for 2026, as we have shared with you on 23rd of February 2026, when presenting our full year 2025 results. I would also like to mention here that for now, as of mid-July, we will shift towards a standard delivery framework within two business days, a major operational shift that requires careful preparations. We are on track to go live on 12th of July. Obviously, there is more to tell on the path to a future-proof postal service, which I will do a bit later. To summarize the first quarter of 2026 for PostNL, I would phrase it as a disciplined execution of our new strategy while navigating growing geopolitical uncertainty. The current tension and uncertainty in the Middle East weighs on consumer confidence, domestic consumption, and fuel costs. With regard to fuel, it is good to mention that the direct financial impact of increasing fuel prices is mitigated by fuel surcharges, as is usual in the transport sector. Though the current geopolitical situation is certainly an explanation for weaker growth of the e-commerce market is closer. At our segment e-commerce, we continue to execute on our volume to value strategy. that entails sharper customer segmentation, differentiated propositions, and disciplined volume scaling. We see that our targeted yield measures gain traction and are expected to build further momentum during 2026. The execution of the value strategy also means deliberate contract negotiation with temporary pressure on volumes, an effect that will fade out over time and is taken into account in our projections. At platforms, the strategic aim is to accelerate international growth via our asset-like models, Spring and MyParsel, with European e-commerce driving volume and revenue growth. For our Asian e-commerce activities, we apply the value-focused approach as just explained. As you know, an important pillar of our strategy is our commitment to securing a sustainable postal service. We are currently preparing for a major operational transition and are on track to switch to a standard framework for all mail, including USO mail, of delivery within two business days as of mid-July. An important but intermediate step towards a future-proof postal service. To reach a long-term viable postal service, there are more conditions that have to be met. First, an extension of the delivery framework to within three business days is necessary to allow for further cost savings potential. Furthermore, clear and timely political decisions to amend the Postal Act are crucial to avoid further delays. But also, compensation for net USO costs in transitional years is needed. In this quarter, legal proceedings regarding compensation for the net USO costs and withdrawal of current resignation were formally initiated. And last but not least, a timely completion of standard process for government mail under appropriate conditions is really key for the longer-term perspective of the coastal market. Then we move to our key reported figure for the first quarter of 2026, summarized in the table you see on this slide, with volume and revenue shown per segment. It follows the new segments as presented to you at our technical market day last September. In the back slides of this presentation, you will find the reconciliation to help you. Again, this is a high-level summary, and on the next slide, I will guide you to more details at segment level. Bottom line, revenue for the group in the first quarter of this year amounted to, say, $781 million, which is in line with last year. Let's move to the segments, and starting with e-commerce. Overall, we see good progress of the targeted yield measures, demonstrated by a 4.1% increase in the average price per parcel. However, in a more challenging external environment. Revenue amounted to 451 million, compared to last year, 473 million, down 4.5%, with volumes declining minus 7.1%. If you would look only at the volume-related revenue, the 7.1% volume decline resulted in a 3.3% decline in revenue, instead of the 4.5% I just mentioned. Let's dive a bit deeper into the key drivers. Domestic volumes were down 5.5%, primarily reflecting weaker market growth related to lower consumer spending compared with last year. Market share was slightly down and developed as expected following targeted yield measures. International volumes, mainly from Asian webshops, were down 13.2%, reflecting the weaker market growth and temporary pressure related to the deliberate contract negotiations under PostNL's volume-to-value strategy. The volume decline was partly offset by positive price-mix impact of $14 million, predominantly driven by price, evidencing further progress on our targeted yield measures. The yield measures came in according to plan and were supported by a minor favorable shifting mix. The average price per parcel was up 4.1% compared to Q1 2025. The step down that you see in the bucket, other, is predominantly explained by the sale of BS, not distribution, in Q2 2025. which means that in Q1 2025, it still contains revenue from the former subsidiary. Let's move to platforms. Revenue was up 2.6%, 285 million, with volumes up 1.2%. At constant currencies, reflecting underlying business performance, revenue increased 5.9%. In line with our strategy to expand our intra-European business, European volumes were growing by 9.6%, while volumes from Asia declined double-digit, reflecting weaker market growth and temporary pressure related to to the deliver of contract negotiations under PostNL's volume-to-value strategy. Also at platforms, prices increased and were supported by a favorable mix effect. Other revenues showed a slight decline. And then the third and last segment, mail. Revenue rose by 2.1% to $316 million. versus 309 million in the quarter last year, mainly explained by the impact from volume development and tariff increases. Adjusted for election mail, volume decline was 8%, showing the continuation of the underlying trend of structurally declining mail volumes. Overall mail volumes were down 2.8% this quarter, supported by 90.4 million items related to elections. The impact from the volume decline was more than offset by a positive price-mix effect. Stamp prices were up 6.9% as of the 1st of January of this year and 8.3% as of mid-2025. I already told a lot about the preparations towards the standard meal delivery framework of BFIS II that involves major adjustments in routes and working schedules. A social plan is applicable, and we have established an implementation organization to safeguard a disciplined execution of the change program. To wrap up, We confirm our outlook for 2026 as on 2023 of February communicated. For normalized EBIT, our outlook is between 40 million and 70 million, and we expect that to translate into a free cash flow of between 0 and minus 30 million. That outlook is based on the assumption of an expected total revenue growth of between 5 and 7%, And in 2026, we continue to invest in our strategic focus areas, with CAPEX expected to be around 125 million, while the lease payments will be at the same level as in 2025. The expected organic cost increases remain high, around 140 million expected, mainly labor-related and other inflationary pressure. but price increases are expected to be more than sufficient to mitigate this. Our focus will continue to be on strong cost control and further efficiency improvements, building on our proven efforts to reduce costs. The graph on the left side indicates the assumed development of normalized EBIT on a segment level. Please note that the outlook of 2026 assumes limited impact from changes in the treatment of the de minimis thresholds in the EU and the US, or in related customs handling and clearance fee structures. The scope and timing could evolve during the year and could impact performance. We are ready to implement a valid operational solution for customs handling and clearing fees in the course of the year. Furthermore, the outlook excludes the risk that prolonged geopolitical uncertainty may increase inflationary pressure and impact consumer spending. So, to conclude this presentation, 2026 will be the year to reach the inflection point in the execution of our strategy. With an outlook for normalized EBIT of between 40 and 70 million, and free cash flow of between zero and minus 30 million. For e-commerce, the focus is on a continued and disciplined path towards sustainable value creation. At platforms, the focus will be at further investments to capture international growth, and at mail, 2026 will be really a transitional year towards a future-proof postal network. with impact for people and processes. As of mid-July, we will shift to a delivery framework of D2S2, an important step. We are on track towards our breakthrough 2028 ambition and are connected to deliver what drives us all forward. Thank you. Thank you, Linda. So time to open up for Q&A right now. Operator, can you please explain?

Thank you. 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 go to our first question. One moment, please. And our first question today is from the line of Mikel de Klerk from KBC Securities. Please go ahead.