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.

Hi there, and thanks for taking my questions in the new format. I understand, of course, that you don't give any numbers more on the EBIT in the trading updates, but I was just wondering, you mentioned that you remain on track with the typical seasonality, of course, in mind, but if you look at the top-line updates, both in e-commerce and platform, it looks like you're trending a bit well below the guidance for the full year. So, minus 7% domestic or minus 7% e-commerce volumes. This is a guidance of plus 1 to 3 for the full year. At platforms, you are also trading below the top line. So, I'm just trying to understand how the EBIT can be in line, whereas the top line is clearly lagging a bit. I understand, of course, the geopolitical situation might play an impact. Can you give some color on the phasing here, the difference that you've seen between the January and February months versus March, and then also exiting in the month of April, to help us understand a bit? So that would be my first question. And then, secondly, also, we have seen in Belgium that there has been a at one of your key competitors there. Should we expect any positive volumes from that in the second quarter at your end? And then maybe because you are also in, let's say, negotiations with the unions following the shift to D plus two, how are negotiations going there and how are the suggested changes being perceived by the unions? Those would be my questions, please.

Yes, thank you Michiel. Well, let's start with your first question on the top-line development versus the statement that normalized EBIT is expected to develop in line with expectations and follows the usual pattern. Indeed, I can imagine this is a new aspect of our trading update and the way we present it. But to comment on your question, it's, of course, to start with our revenue. So that's what we see. We see proof coming from our yield measures, and that is also what you see in the performance as reflected in the press release, where you see that our revenue impact is higher significantly better than the impact on the volumes so that is of course a driving element it's not just volumes what you see in revenues but also yield and mix which have an overall impact and of course overall we are very disciplined and continue to be disciplined on our strong and decent cost savings measures which are fully on track And as such, we can confirm that the normalized EBIT development is in line with our expectations and the usual seasonal pattern. And maybe lastly, of course, you know that the first quarter is overall, in the end, not the biggest contributor to the full-year performance. and that all together brings us that we can confirm our normalized either development in line with our expectations. Then on your second question, on the geopolitical implications, well, we cannot make it, we cannot detail out on the exact January, February, March, but of course what you do see is, If you look at, for instance, the figures and the stats from CBS, you see that there is, if you look at the domestic consumption of goods, you see for January and February, you see the months over time deteriorating. So that is the implications for that. weaker market growth, which we also observe, uh, from these external sources. Um, and of course, uh, yeah, we don't have that glass bowl for the future, uh, and that's why we also, uh, We monitor the uncertainty, we monitor what's out there, and we adapt to whatever we can control and make sure that we are prepared to the best we know. Then your question on Belgium. Well, to start with, Belgium... As you know, the strikes only started near the end of March, so of course only a minor part of this quarter. And secondly, overall Belgium volumes are a rather limited or small part of our total volumes. So, of course, we monitor and closely follow the developments and, of course, the strikes over there are helpful to us. And then regarding your last question on D-plus-2 with the unions, well, overall, we do not have any discussions on D-plus-2 with the unions or the CLA postal deliverers. We have clearly been in close contact with them with the transition to D plus 2. We have involved them in all our steps, which we have taken very close at collaboration with them to take them on board when the first signs of this transition occurred. were at hand, and that is also how we came to the social plan agreement with them, which is of course an important agreement with them to be able to make these transitions. And overall, so the preparations are fully on track and, as said, what is very important is that we constantly are in alignment with the unions and also the people itself, the people involved, to take them along this transition. You can imagine this is really changing for approximately 15,000 deliverers. The daily route, their daily ways to work. So it's very important that we put the right attention and effort, but also financial safety for them with the social plan to have that covered up. So I hope that answers it.

We are for questions. Yes, definitely. Thanks for that.

Thank you. We will now take the next question. And the question comes from the line of Marco Lineta from Barclays. Please go ahead.

Hi, morning. Thanks for taking my question. I've got a follow-up question on the cluster volume growth. Because the Q1 was a throw start of the year. Now I understand the price mix was positive, but you still have got a guidance out there of volume growth within 1-3%. So are you still committed to that guidance? And if so, does that mean that we should see volume growth setting up to a larger number in Q2 already? And then when you mentioned temporary headwinds to volume growth, what kind of visibility do you have that these are temporary and therefore you will be able to, let's say, gain these volumes back? And then maybe a final question on your statement that you're waiting for a tender process for government payee. So can you just clarify what this tender process means and the timing of it?

Thank you. Yes, thank you, Marco. On your first question on the volume growth assumptions, Well, let me start that looking at our outlook, it's good to make a clear distinction between assumptions and the real outlook. And the 1 to 3% volume growth are our assumptions next to a few others. And I said also in my reply to Michiel, overall when looking at revenue development, there are many, many drivers to revenue development. And of course, well, as I said, we cannot look into the future and determine how market growth will develop. But overall, we see that with the fact that we have such a disciplined execution of our volume to value strategy and that we see the proof points thereof, we are confident in our strategy and also confirm the outlook which we provide. And that's also why we confirm that today in our press release. If you then look at your second question on the temporary negotiations, well, of course, these are very careful contract negotiations with several customers. And, well, why are we confident that it is considered temporary? Because we are really in the middle of those negotiations. And we really believe in our strategy as such, and also in the way that we deliver and continue to deliver strong NPS, which also for these parties is important. is a very valid element. And as such, given where we are, we believe that we will bring that to the end and that this is part of the game we and they are playing. Of course, I cannot comment now because we don't have fixed conclusion dates and they all have different start and end dates. But, of course, that's relating to those temporary pressures. And as I said, the temporary pressure is not just the only one driving the volume decline. As Jeff also mentioned, the weaker market growth is also how the general market conditions are also playing part here. And then the last question, let me remind that this was on the tender process. Yeah, let me give some color to you on that. So how that normally works, so the tender has been set out. There was already an earlier tender set out by the government. though that tender was cancelled eventually, or not called official, and was as such had to be renewed. And the current tender is out there to have start for the 1st of July, 2027. One of the elements which was contradicting in the tender was relating to the service quality levels. So in the former tender, you still have the old quality levels, or old, but the service levels of 95%, while we are now moving, obviously, to service level requirements of 90% when we transition to B plus 2. So actually they were not communicating with each other. So if you have a tender for 95%, but our network will be set up for 90%, we cannot help it. But we expect to have the new tender being finalized in the coming months and then to be ready by the 1st of, or we aim to have it ready by the 1st of January 2027. And that, of course, depends not just on us, but it's really the government who controls it. And we really urge for that timely completion.

Thank you very much. If I may, a quick follow-up question. So on your contract negotiations, especially with international volumes, I mean, correct me if I'm wrong, but you're basically trying to push to higher prices. So these clients are generally very price sensitive. So can you give just some color why you think these international volumes or clients will be willing to set higher prices and not... they go with a competitor i guess at the moment if they're not using personnel volumes are dropping they're using someone else so how do you win them back with higher prices as well thank you well let me start by saying that youth measures are not just price increases and so youth measures contain also

area of efficiency and equal flow agreements so it's not just pricing but it's a combination of pricing and the efficiency elements I just referred to and in addition to that what is important is also the factor of quality so we are strong in our NPS and that is also well noticed by these type of clients. So it is a combination of those factors which makes us the move and have the negotiation discussions with them.

Okay, thank you.

Thank you. Thank you. Your next question, please. crossing the line of Mark Swartenberg from IMG. Please go ahead.

Yes, good morning, and thank you for taking my questions. A follow-up on the temporariness of the impact of the negotiations. Can you give us a bit of a timeline where you think these contracts are renewed or renegotiated? Because we have done one quarter. If you say you're halfway... basically means that also Q2 will see the impact and maybe even a bit worse. How should I look at the volume development going into Q2 from this temporary weakness?

Yes, thanks Mark for your question. Yes, on that temporariness of of those negotiations. Well, I cannot really give fixed dates or conclusion dates for that. As it's, of course, a combination of more clients and they have different dates and also different negotiation paths. So I cannot give you that specific answer as such.

But how can you then guide for your full year on volumes and the outcome of yield plus volume? Because that's a bit what you tried to say on Marco's question. Maybe it's a combination of the both, but how do you then know what the impact will be?

Well, as you say, it's a combination of both. And, of course, as I said, it's not just one client or one customer where this is at hand. So it's a combination of many. And, of course, that's the balance of when a few of them are close to finalization and the ones to start. what we take into account into our forward-looking statement, and that's what we confirm in our outlook as still applicable.

And if you then look at your volume decline of minus 7.1, you also mentioned that consumer spending data is deteriorating in Q1. Well, we now have the full impact from energy prices on probably consumer spending, so things might get worse. How should I look then to that trend of minus 7? Was that starting January with a small minus and ending with a double-digit decline now in April? Because you gave this outlook somewhere mid and fab. So... You basically didn't see a minus 7 already in January to give such an outlook. Can you give me a bit of feel how that works and how you see that trend going into June?

Well, so when we provided the outlook in mid-Feb, of course, indeed you just have one month, but also you have several assumptions underlying that. And secondly, with that geopolitical uncertainty, we also don't know how that will develop, and that's also why we explicitly refer to that in our outlook. and refer to that as a comment to our outlook. And last but not least, of course, it's not for nothing that we always include the range in our outlook, and that is something which is connecting to that, because you cannot, well, we also don't know precisely how that will, I wish it was true we could determine it like that, but necessarily saying, yeah, it was mid-February, we sold January, and then you draw a conclusion for the rest of the year, well, that's quite too soon to tell, I would say. So it is not something static as such.

Just looking at actuals over a monthly basis, you have been almost four months in the bag, could you give us a bit more color than how the trend is, what the trend is looking like? Is it rather stable or is there something starting high and now almost double digit defined or any color on that gives us a bit more feel on how we should model it?

Yeah, well of course for P4 it's not locked so I cannot comment on that. The only thing I can confirm is and also that we stick to that. So more color on that I cannot give to you.

Sorry. All right. Basically, if the volumes are a bit behind, then it must be something more positive in your expertise. That's a bit what I'm looking for maybe on the cost side or the yield side or a combination of those.

Yeah, but as I said, so revenues and eBay development are mostly driven by volume, right? common to meet you. We are very capable and strong in our discipline cost management and efficiency measures as such. That's a combination together with the yield measures which are also part of that performance. So it's not just volume.

That is something I was looking for in you. And lastly, the With the mill going to D plus 2, negotiations with the unions, is there any, the social plan, will that have a big impact on the cash flow? Can you give us any feel for that?

Yes, well, indeed there is a social plan, but it is limited impact.

And that's already included and anticipated? Yes, of course. All right. Thank you very much.

Thank you.

Thank you. As a reminder, if you would like to ask a question, please press star 1 and 1 on your telephone keypad. That is star 1 and 1 to ask a question. We'll now go to our next question. One moment, please. And the question comes from the line of Hank Slotboom from The Idea. Please go ahead.

Good morning, Linda and Ingrid.

Good morning.

I hope you don't mind me telling you a little bit more on the volume decrease we see in international parcels, both in platforms and in e-commerce. If I look at what happened in the first quarter, then France has already introduced the two euros per parcel or per product line. surcharge on parcels that were not coming from the EU. And the result was that a lot of the traffic was diverted to Liege and to Amsterdam Schiphol Airport. What I'm struggling with is it shows that the Chinese are very much oriented on price. If they can afford two euros, then they bring their stock elsewhere. Is that part of the reason why Europe has done so well in the case of spring? In fact, Europe traffic was up by 9.6%. It has to come from somewhere, but there appears to be a mismatch with the double-digit decline from Asia. So perhaps you can shed some light on it. And then I have some follow-up questions as well, but perhaps let's take this one first. Yes.

Well, regarding your comment on the France situation, yes, of course, we also know that to Sokol and Liege, those movements are happening. However, there are, of course, more parties and brokers over there, and what we see is that the brokers over there ensure it still ends up... Again, in France, as such, we don't see that movement you are describing as such in the markets. And then on the question of, on your note, so how does it, is it also impacting those, let's say, the France situation, specifically the inter-European volumes? I think what is driving the inter-European volumes our execution of the strategy. So we have really been investing a lot in that international expansion and in that inter-European expansion. also already last year and also with the required investments in marketing and new line rules and that is what you see now, is that we see traction on those volumes and that is not necessarily driven by the France situation you are referring to.

In connection with my previous question, You've already said that it's not only about pricing negotiations that are taking place now with the Asian webshops. It's also about equal flow. If I refer back to the two euros in France, doesn't that show that there's more opportunity for you in creating more equal flow from the Chinese? I know that in the old situation, you were stuck to certain arrangements and that was not automatically, that did not automatically mean that you could deliver the Chinese goods on the days that you prefer, on the low days, let me put it in those phrases. Is there more to gain in the equal flow element than in the pricing element when it comes to Asian volumes?

Yeah, well, maybe specifically on that question with EcoFlow, that is, of course, EcoFlow really where we see it applies to our own network. And here it is specifically not necessarily only our own network. And secondly, where we have an opportunity, let's put it like that, is of course we have a lot of experience with customs and all that situation in the way that we have built up that knowledge over years. And that's also why with all these changes in handling fees and in the minimum thresholds, For us, it is key to make sure and we are sure that we are ready for the right operational solution to cater for those complex regulations and that we are ready there to serve our customers as they are used to from us.

Two further questions, if I may. One is on my parcel. It says, my parcels and other services, and then I see a brand new figure. How is my parcel doing? They are about to open a franchise in Italy, I understand, I understood, but the underlying trend there, in the case of spring, we see a clear growth. How is my parcel doing?

Yeah, well, overall underlying for my parcel, of course, well, they are progressing well also in their strategy. Of course, they are like what we see in the other e-commerce streams, also noting, of course, the market developments, or at least that is what they are also facing. So that's on my parcel. Yeah.

Wonderful. And then my final question, you already referred to the mill and what is necessary to make a mill, let's say, healthy again. Has there been any progress in the discussions you have with ACM? ACM announced their intention to do an investigation on the back of complaints they had from the publishers. Has there been any progress in, I can imagine that there's still a lobby going on with two economic affairs to change things. Are there any developments in that respect?

No, well, as the ACM announced that investigation and the investigation started and we are cooperating, but no further developments there. It's too soon to tell. No, not on the HCM. What we can know to you is that This morning at 10, at least the State Council confirmed or didn't have any objections or comments on the D plus 2 and D plus 3 change. So that was confirmed and published this morning at 10. So that is at least now formally done.

Okay, that's great.

Thank you very much.

Thank you.

Thank you. There are currently no further questions. I will hand the call back for closing remarks.

Thanks for listening in. Thanks for your questions. If you have any more questions, please reach out. And for now, have a nice day.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.